The development banks of the five-member emerging economies group, BRICS, on Thursday signed an agreement aimed at boosting trade among the member nations by offering credit in their respective local currencies - a move that could potentially reduce transaction costs of an intra-BRICS trade.
The agreement, signed at the conclusion of the fourth BRICS Summit in New Delhi, was intended to reduce the demand for fully convertible currencies for transactions between the group nations: Brazil, Russia, India, China and South Africa.
The Summit has also made a suggestion to set up a BRICS Development Bank, and has directed its respective Finance Ministers to examine the proposal before the next Summit.
Indian Prime Minister Dr. Manmohan Singh called for greater interaction amongst the business communities. He added that issues such as easier business visas must be prioritized. "As large trading countries, BRICS countries have a strong interest in removing barriers to trade and investment flows and avoiding protectionist measures," he said.
The proposed Development Bank is aimed at mobilizing resources for infrastructure and sustainable projects in BRICS and other emerging economies and developing countries.
The Bank's resources are to supplement the existing efforts of multi-lateral and regional financial institutions for global growth and development.
Significantly, the BRICS countries called for reforming the International Monetary Fund and World Bank by increasing representation from developing countries. The nations also agreed to support a developing country candidate for the post of World Bank President.
Reflecting on the impact of the eurozone crisis on the world economy, the emerging economies' group 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 liberalizing global trade.
by RTT Staff Writer
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