Now Brazil, Russia, India, China and South Africa are discussing concrete parameters and conditions of accumulating currency reserves. The size of the fund has also been determined. It is to be $240bln. However, the establishment of the mechanism of mutual lending has an important political aspect as well, say experts interviewed by The Voice of Russia.
The concept of setting up a BRICS anti-crisis fund sprang up in June this year. At the G20 summit in Mexico, Russian Deputy Finance Minister Sergey Storchak said frankly that such a fund would be set up if Brazil, Russia, India, China and South Africa did not get a sufficient opportunity to influence decision-making in the IMF which is currently undergoing the process of reforms . Storchak said that the BRICS countries had obviously reached a stage when they could insist on being taken into consideration. Indeed, the five countries that make up the group have 43% of the world’s population and about 18% of the global GDP. The total reserves reach almost $4trln. However, when a country appeals to the IMF the imposed obligations actually equal the abandonment of economic sovereignty.
The growing economic power of the BRICS countries allows them to claim a more important role in world politics, financial analyst Roman Andreyev says.
“I believe that the main idea is to make the world community understand that there are other organisations than the IMF or the WB that could set up their own rules. Political motives prevail here, this organization is to become an alternative to all other funds that exist or are being set up in Europe. I believe that the BRICS countries mean to demonstrate that the developing countries should not be ignored and there is every chance that soon the developing countries will reach a high level and will be able to recommend their economic and political technologies to other countries.
At present, BRICS experts are discussing two ways of making the fund: some member-states suggest accounts in US dollars and others insist on using the mechanism of special rights of borrowing. Part of the money in the future fund could be nominated in the member-states’ national currencies, chief analyst of the Sovlink investment company Olga Belenkaya says.
“The crisis which began several years ago will last for an indefinite time and it is important to develop mechanisms of protection at all levels, including the supranational one. So far, the developing countries do not enjoy a reputation in such international structures as the IMF which would equal their contribution. If some financing in the future fund is carried out in the national currencies the global demand of these currencies will grow.”
Still, it is too soon to speak about the final parameters of the new international currency fund. Things are at the stage of talks. Even the volume of the fund, $240bln, is a preliminary figure. China, for example, insists on allocating considerable reserves, so that the fund would be taken seriously on the global market. All these issues are to be settled before the BRICS summit which is due to take place in South Africa in March next year.