BRICS Development Bank potential also being analyzed
Apr. 3 – The BRICS countries, who completed their fifth annual summit in Delhi last week, have agreed to provide credit facilities to each other in local currencies. The agreement, signed by the presidents of China, India, Russia, Brazil and South Africa, permits easier transactions and grants them freedom from having to use fully convertible currencies for trade, effectively avoiding use of the U.S. dollar and Euro.
The five countries also agreed to look at ways to establish a BRICS Development Bank for financing projects within the group and with other developing countries.
The multinational credit agreement involved five banks:
- Brazil’s Banco Nacional de Desenvolvimento Economic e Social;
- Russia’s State Corporation Bank for Development & Foreign Economic Affairs (Vneshecomonbank);
- The Export-Import Bank of India;
- The China Development Bank; and
- The Development Bank of South Africa.
“The rise of emerging countries has taken a huge step forward with these initiatives and brings home the importance of engaging in trade with the BRICS nations,” comments Chris Devonshire-Ellis, principal of Dezan Shira & Associates. “They are each in the process of developing large consumer wealth in addition to possessing massive commodities resources. All MNC’s should be developing a BRICs strategy, and their cooperative agreements to further develop and share in their economic strengths will have major political and trade implications in shaping the world during the rest of this century.”