BRICS demand global monetary shake-up, greater influence
(L-R) India's Prime Minister Manmohan Singh, Russia's President Dmitry Medvedev, China's President Hu Jintao, Brazil's President Dilma Rousseff and South African President Jacob Zuma attend a joint news conference at the BRICS Leaders Meeting in Sanya, Hainan province April 14, 2011. The development banks of the five BRICS nations agreed in principle on Thursday to establish mutual credit lines denominated in their local currencies, not in dollars. REUTERS/How Hwee Young/PoolOn Thursday April 14, 2011, 7:32 am EDT
By Abhijit Neogy and Alexei AnishchukSANYA, China (Reuters) - The BRICS group of emerging-market powers kept up the pressure on Thursday for a revamped global monetary system that relies less on the dollar and for a louder voice in international financial institutions.
The leaders of Brazil, Russia, India, China and South Africa also called for stronger regulation of commodity derivatives to dampen excessive volatility in food and energy prices, which they said posed new risks for the recovery of the world economy.
Meeting on the southern Chinese island of Hainan, they said the recent financial crisis had exposed the inadequacies of the current monetary order, which has the dollar as its linchpin.
What was needed, they said in a statement, was "a broad-based international reserve currency system providing stability and certainty" -- thinly veiled criticism of what the BRICS see as Washington's neglect of its global monetary responsibilities.
The BRICS are worried that America's large trade and budget deficits will eventually debase the dollar. They also begrudge the financial and political privileges that come with being the leading reserve currency.
"The world economy is undergoing profound and complex changes," Chinese President Hu Jintao said. "The era demands that the BRICS countries strengthen dialogue and cooperation."
In another dig at the dollar, the development banks of the five BRICS nations agreed to establish mutual credit lines denominated in their local currencies, not the U.S. currency.
The head of China Development Bank (CDB), Chen Yuan, said he was prepared to lend up to 10 billion yuan to fellow BRICS, and his Russian counterpart said he was looking to borrow the yuan equivalent of at least $500 million via CDB.
"We think this will undoubtedly broaden the opportunities for Russian companies to diversify their loans," Vladimir Dmitriev, the chairman of VEB, Russia's state development bank, told reporters.
ALL DOWN TO THE BRICS
The call by the BRICS for a new monetary order are not new.
But, coming hours before a meeting in Washington of finance ministers from the Group of Seven industrial nations, the traditional power brokers of the world economy, Thursday's communique showed the growing confidence of emerging markets.
Burdened by heavy debt, the United States, the euro zone and Japan are struggling to shake off the lingering effects of the 2008 global financial crisis. Rich countries will grow 2.4 percent this year and 2.6 percent in 2012, the International Monetary fund forecast this week.
By contrast, less well-off countries have emerged relatively unscathed. The IMF is forecasting that emerging and developing countries will grow 6.5 percent both this year and next.
"The quality and the durability of the global economic recovery process depends to a great measure on how the BRICS economies perform," Indian Prime Minister Manmohan Singh said.
The leaders reviewed the global role of the Special Drawing Right, the IMF's accounting unit and reserve asset, which some experts believe could grow into a partial substitute for the dollar.
But they stepped around the issue of whether the yuan should join the SDR, saying only that they welcomed discussion of the composition of the SDR's basket of currencies.
A member-country official said the group was split on whether China's currency, which cannot be freely exchanged except for trade and investment purposes, met the criteria for being part of the SDR.
"There is a need for a broad-basing of the international monetary system. The SDR is an instrument to do that, but we still have no unanimity on the inclusion of the Chinese currency in the SDR as of now," said the official, who declined to be identified.
The SDR now comprises the dollar, the euro, the Japanese yen and the British pound.
"India has said that the SDR is an accounting mechanism used by the IMF, and countries such as Brazil have also said that this (the yuan) should be convertible first," he added.
Though keen on a more diverse global monetary order, Beijing has given no indication that it is ready to make the yuan freely tradable or to dismantle capital controls as the price for the prestige of being part of the SDR.
BROAD-BRUSH TREATMENT
Emerging economies have already won more say in the way the IMF is run, but the BRICS leaders said they were still under-represented.
"We ... agreed on the need for the reform of international financial institutions in order to promote a just economic order," South African President Jacob Zuma said.
On the hot topic of capital flows, the BRICS called "for more attention" to the risks posed by massive cross-border flows of money but went no further.
The group said the world economy, of which its members make up nearly a fifth, still faced headwinds.
"The developments in west Asia and north Africa, and the aftermath of the huge tragedy that befell Japan, have introduced fresh uncertainties in the global recovery process," Singh said.
Swings in commodity prices are also a prime area of concern for the BRICS. China is the world's biggest importer of many commodities; the other BRICS members are major exporters of natural resources.
China hopes the group will be able to agree on a common stance on commodity price fluctuations at the G20 summit in the French city of Cannes in November.
The main aim of the BRICS is to forge a common emerging-market negotiating stance on issues from climate change to world trade and to act as a counterweight to the West in settings such as the Group of 20 forum of advanced and developing economies.
The BRICS caucus is a work in progress. Thursday's brief meeting, held under tight security at a beach-front hotel, was only its third summit and the first to include South Africa.
The group brings together five countries that, though frequently united in their disinclination to do the West's bidding, are a political and economic mosaic.
"Our economic potential, political influence and our development prospects as an alliance are exceptional," Russian President Dmitry Medvedev said.
(Additional reporting by Ben Blanchard, Zhou Xin and Ray Colitt in Sanya and Chris Buckley in Beijing; Writing by Alan Wheatley; Editing by Ken Wills and Dean Yates)
67 comments
- 0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentA Yahoo! User Report Abuse
Go back to watching Jersey Shores. You people obivously want to be like a third world country.
Reply - 0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentA Yahoo! User Report Abuse
There's your "Hope and Change" nothing else needs to be said.....
Reply - 0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentGdog Report Abuse
The continual devaluation and eventual destruction of the dollar has been a principle goal of Obama and Geithner. They are close to achieving that goal. What have we learned from this? Next time there's an election, let's not vote for a presidential candidate who's an enemy of the United States.
Reply - 1 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentGene Report Abuse
With BRICS dealing out the US, let's leave the responsibility of feeding the world's poor with them.
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The ingratitude of foreign nations receiving our assistance to prop up their pathetically managed economies and citizens needs to stop. Third World nations are continuously in poverty because the United Nations won't make an effort to help manage these nations and focus on the raw goods they do have or what they could produce. Instead, it's left to the US to feed millions of people, while their corrupt governments continue on life support. The UN spend more time and billions of euros focusing on global warming. Try explaining that to a child that hasn't eaten in days.
If these countries want to go it without us, fine. Let the US take care of it's own for a change. No matter what happens, the US will always be demonized. That's the price of individualism, instead of banding together with a bunch of self-serving socialist countries. - 2 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 1 users disliked this commentGogaz Report Abuse
the revolution will not be televised.
Replies (1) - 0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentA Yahoo! User Report Abuse
The solution for the BRICS to remove the dollar as the reserve currency is right in front of them, sell their Treasuries and stop buying any further
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This leaves the unFed as the buyer of last resort and voila, in no time at at, the dollar is down the crapper
/wait, are they not already not buying treasuries and slowly dropping treasuries? Yes and yes... - 5 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 1 users disliked this commentJA Report Abuse
We (the USA) are General Motors to their Toyota (BRICS).
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Our self-infatuation, as GM's complacency with a "we cannot be toppled" attitude, has led to our country's attitude of complacency. Well, as we see here, other countries are NOT so complacent.
Ironic... the USA has a HUGE, perhaps unpayable debt, with diminishing global returns. While these up and commers (by our own investment)... are stealing the global world out from underneath US. Just like GM vs. Toyota... we all know how that ended. Except there will be no one there to bail US out.
While America spent VAST resources interfering with other countries and returnless global matters since WW2 ... THEY invested in themselves. They are winning. And for all those resources messing with OTHER countries... we have nothing to show. Nothing but a world that looks at US with either disdain or hatred.
This country needs new management NOW.
Our politicians are the problem. The entire crop... and even the land they ALL come from. Instead of a shining example to the citizenry of what represents America, the political system itself has become sick and corrupt like organized crime. Our leaders believe themselves "entitled" beyond us trodden masses... they have absolutely NO IDEA what to do, how to do it, or even where to go now. - 1 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentLuther Report Abuse
When the nations economies band together to destroy another large countries economy I look at it as a threat. To bad for me because I live in the US. I wonder how my so called "great leaders" will think about the all bullshit they created over the past 20 years. It looks like china wants us to pay up for the federal loans we asked for. Ever since we sent 85% of our industry to china, we are looked as a dependement nation instead of a selfthriving nation.
Reply - 5 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this commentrowley Report Abuse
Abolish the Federal Reserve.
Reply - 1 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 1 users disliked this commentKevinK Report Abuse
go back to watching american idol. there's nothing to see here!!!
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