In an effort to reduce the transaction costs of intra-BRICS trade, the five-member emerging economies’ group on Thursday inked a pact to extend credit in the respective local currency.
The agreement, signed at the conclusion of the fourth BRICS Summit here, is intended to reduce the demand for fully convertible currencies for transactions between Brazil, Russia, India, China and South Africa (BRICS).
The Group also signed an agreement on Letter of Credit (LC) Confirmation Facility which envisages confirmation of LCs on receipt of a request from an exporter, exporter’s bank or importer’s bank.
India also called for easing the issuance of business visas between the BRICS nations and proposed setting up of a BRICS Development Bank.
Significantly, the BRICS countries called for reforming the International Monetary Fund and World Bank by increasing representation from developing countries.
They agreed to support a developing country candidate for the post of World Bank President.
Restore market confidence
Taking serious note of the impact of the Euro zone crisis on the world economy, the emerging economies’ grouping said: “The immediate priority is to restore market confidence and get global growth back on track.”
Referring to the risks of large and volatile cross-border capital flows being faced by emerging economies, they said, “We call for further international financial regulatory oversight and reform, strengthening policy coordination, financial regulation, supervision cooperation, and promoting the sound development of global financial markets and banking systems.”
The BRICS countries also called for closer cooperation to revive the stalled Doha Round talks for a deal on further liberalising global trade.