“The agreement on the BRICS $100 billion currency reserve pool came into force Thursday. The fund was set up by the developing nations group to protect their national currencies from volatility in global markets,” RT reports.
Photo courtesy of The Russian International Affairs Council (RIAC)
“The arrangement is important not only because it provides the possibility to quickly obtain additional liquidity, but its very existence has a positive, stabilizing effect on the market. Similar agreements created by other countries (for example, the European Stability Mechanism) continue to be in force and fulfill their functions,” Russia’s BRICS group representative told TASS. He also noted there is a number of technical documents to be signed soon, preferably during the next meeting of the BRICS Central Bank Governors and Finance Ministers.
The official also said that currently there are “no signals of an immediate need of the pool’s funds from BRICS partners.”
The BRICS countries contributions to the liquidity fund look as follows:
- $41 billion – China
- $18 billion – Brazil
- $18 billion – India
- $18 billion – Russia
- $5 billion – South Africa
- – – – – – – – – – – – – – – – –
- $100 billion – TOTAL
In July 2014, a historic milestone for the BRICS group (Brazil, Russia, India, China, South Africa) was reached as the group signed a document to form the the $100 billion New Development Bank (NDB) in addition to a reserve currency pool worth over $100 billion, known as the Contingent Reserve Arrangement (CRA).
China’s Parliament ratified the creation of the $100 billion New Development Bank, also known as the BRICS Bank, on July 1.
It’s worth noting that the BRICS bank will start lending in local currency by April 2016 and its member countries will be the primarily focus of the bank, K.V. Kamath, the President of the NDB told the Press Trust of India (PTI) on July 10.
“I think we will start the lending process sometimes early first quarter next year … the idea is that by April next year, we will create a state of projects from all the member countries (for lending),” Kamath told PTI in an interview.
The BRICS will start to open local offices of the New Development Bank (NDB) in 2016, according to Russia’s TASS news agency.
The first office in South Africa will be opened at the end of 2015 or by the beginning of the next year, Andrey Bokarev, a department head at the Russian Finance Ministry said. After that, an office in Brazil will open, and then in Russia, the official noted.
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