BRICS Countries Consider Central Bank
The fourth annual BRICS summit, to be held in New Delhi on Thursday, will cover a wide range of topics of interest to member countries – Brazil, Russia, India, China and South Africa. One of the topics for discussion will be the idea of a multilateral bank funded by developing nations for the purpose of encouraging trade and financing projects in the developing world. This proposed initiative of establishing common institutions is seen as a step toward formalizing the BRICS grouping.
While the five BRICS countries may have little in common geographically, politically, socially and culturally, they do have common economic and financial goals. Collectively, they are home to close to half the world’s population, are among the world’s major economies, and hold a large percentage of global foreign exchange reserves. It has been suggested that a common bank could aid Beijing in its goal of building the renminbi into a viable competitor against the US dollar and euro in foreign exchange and international trade. China has reportedly already stated its intention to offer renminbi loans to BRICS nations, with other member countries extending loans in their respective currencies.
Economists have noted that India would be a recipient rather than a contributor should a common BRICS bank be established. With the country’s less than favorable record on meeting financial commitments, India would need to resolve some of its systemic problems by putting in place regulatory infrastructures before being granted BRICS bank funds. As has been evidenced by the ongoing Greek financial crisis, Beijing will want tangible proof of India’s ability and willingness to repay loans extended.
At a BRICS conference for trade ministers, China’s commerce minister Chen Deming noted that the country’s economic growth this year may be slightly above the 7.5 percent forecast. Reiterating China’s intention to reduce its dependence on trade exports, the commerce minister confirmed that the country would be focusing on the development of local markets. Once referred to as the driving force behind global growth, China’s economy shows signs of lagging, with its economic growth forecast recently cut from 8 percent to 7.5 percent.
Other items on the agenda for discussion by representatives from Brazil, Russia, India, China and South Africa include international terrorism, food and energy security, climate change, weapons of mass destruction and millennium development goals.