ID :
234150
Thu, 03/29/2012 - 12:10
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BRICS nations sign pacts to promote trade in local currency

New Delhi, Mar 29 (PTI) Concerned over uncertain global environment, BRICS nations today signed two agreements to facilitate trade in local currencies and decided to examine the possibility of setting up a Development Bank on the lines of the World Bank to promote funding activities. The agreements signed at the BRICS summit by officials of the five countries -- Brazil, Russia, India, China and South Africa -- are aimed at enhancing trade among the members-countries in the coming years. The Master Agreement on Extending Credit Facility in Local Currency and the Multilateral Letter of Credit Confirmation Facility Agreement are being perceived as a step towards replacing dollar as main unit of trade among them. "The agreements signed today by development banks of BRICS countries will boost trade by offering credit in our local currency," India's Prime Minister Manmohan Singh said in a media statement after the meeting of BRICS leaders. On the proposal of setting up a BRICS Development Bank, he said, "We have directed our Finance Ministers to examine the proposal and report back by next summit." The initiative to set up a BRICS Development Bank on the lines of the World Bank would allow the member-countries to pool resources for infrastructure development and could also be used to lend during the difficult global environment. Expressing concerns over the current global situation and excessive volatility in capital flows and commodity prices, BRICS leaders in the joint declaration said: "The immediate (need) is to restore market confidence and get global growth back on track. "...it is critical for advanced economies to adopt responsible macro-economic and financial policies, avoid creating excessive global liquidity and undertake structural reforms to lift growth that create jobs," it added. Highlighting the risks posed by large and volatile cross-border capital flows, BRICS leaders also called for developing sound global financial markets and banking system. "We call for further international financial regulatory oversight and reform, strengthening policy coordination and financial regulation and supervision co-operation," the declaration said. The BRICS countries also vouched for maintaining stability and integrity of the global monetary and financial system. "We call for a more representative international financial architecture, with an increase in the representation of developing countries and the establishment of a just international monetary system that can serve the interests of all countries and support the development of emerging and developing economies," it added. Concerned at the slow pace of quota and governance reforms in the International Monetary Fund (IMF), the declaration said, the "dynamic process of reform is necessary to ensure the legitimacy and effectiveness of the Fund". The five-nation bloc said that excessive volatility in commodity prices, particularly food and energy, poses additional risks for the recovery of world economy. "...Increased energy production capacities and strengthened producer-consumer dialogue are important initiatives that would help in arresting such price volatility," it added. The countries also called for successful conclusion of the Doha Round of trade talks. The leaders also welcomed the setting up of a BRICS Exchange Alliance, a joint initiative by related BRICS securities exchanges. Intra-BRICS trade is about USD 230 billion now and has the potential of being more than doubled to USD 500 billion by 2015. PTI

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