BRICS bank next step to dollar independence
The ‘club’ of emerging economies known as the BRICS are strengthening their union. The countries are mulling over setting up a single development bank to promote joint investment initiatives, as well as their domestic currencies.
Brazil, Russia, India, China and South Africa are set to discuss the idea at the coming BRICS meeting in New Delhi on March 29, Financial Times says.This is mainly to get a louder say in international arena for the“great reserves,” Ivan Tchakarov, chief economist for Russia and CIS countries at Renaissance Capital, told Business RT. “All of these economies, in particular China, Russia and Brazil and less so India are the countries that are not only growing at a significantly faster pace than the developed economies, but they also have a lot of reserves,” he said. China currently possesses the biggest foreign exchange reserves in the world, standing at $3.2 trillion. This compares with Russia’s $505.4bln and $355.1bln in Brazil, which ranks them the 4th and the 6th on the list.The setting up of such an international financial institution will pave the way for a bigger voting for the BRICS countries in international bodies such as the IMF and the World Bank, Tchakarov added.In terms of priority, infrastructure projects would most benefit all the BRIC members, as it remains well below the world standards in all of the states, Tchakarov said. The move comes after media reports were saying Brazil, Russia, India, China and South Africa were seeking distance themselves from the US dollar. Mutual credits in so-called “intro BRICS currencies” through such a bank for development could really help them“elevate their international status.” And“probably the Chinese Yuan has the biggest chances of achieving that,” the Renaissance Capital expert says.In fact, the BRICS countries have already started to promote their domestic currencies within the area, as the Russian rouble has already started to be traded in Beijing, with the Yuan started to be traded in the Russian stock exchange, Tchakarov reminded.