The central banks of the BRICS countries have signed an operating agreement on a $100 billion foreign exchange reserve pool that is being set up by the grouping’s five member nations to help each other “in case of any problems with dollar liquidity”.
The $100 billion pool aims to protect BRICS member states from currency volatility shocks. India will chip in with $18 billion. The agreement was signed Tuesday in Moscow after the meeting of the finance ministers and heads of the central banks of BRICS, the Central Bank of Russia (CBR) said in a statement. The document contains a detailed description of the procedures that are carried out by the central banks of BRICS nations — Brazil, Russia, India, China and South Africa — within the currency reserve pool, defines their rights and duties.
It will come into force on July 30, CBR chief Elvira Nabiullina was quoted as saying in Moscow. She added that several other documents would be adopted to regulate the operation of governing bodies — the governing council and the standing committee.
China will make the biggest contribution to the pool: $41 billion. India, Russia and Brazil will donate $18 billion each, while South Africa’s investment will be $5 billion.
Technically, the money will remain on the banks’ balance sheets and will be unlocked as soon as any of the BRICS member states ask for help.
In May, Russian President Vladimir Putin had ratified a deal to establish a $100 billion foreign currency reserve pool for the BRICS group. Last July, the five nations signed the document on a reserve currency pool worth over $100 billion as well as $100 billion BRICS Development Bank.
The goal of the pool is to give BRICS member states opportunity to provide each other financial assistance in case of problems with their balance of payments. The BRICS summit in Ufa, Russia, kicked off Wednesday.