Moscow - The Brics group of nations will create a $100bn pool of foreign-exchange reserves to help each other “in case of any problems with dollar liquidity,” the Russian central bank said in a statement.
The fund will be an “insurance instrument” for Brazil, Russia, India, China and South Africa and there are no grounds for it to be used any time soon, Bank of Russia Governor Elvira Nabiullina said in Moscow on Tuesday.
The programme will go into force on July 30 and there are no plans for any new member to join, she said.
China will contribute $41bn, while Brazil, India and Russia will commit $18bn each and another $5bn will be provided by South Africa. The group, whose leaders will meet for talks at a summit July 8-9 in Russia.
The 1998 financial crisis, when the Russian government defaulted on its local-currency debt, is an example of when the pool of reserves of could have come into use, Nabiullina said.
‘Important stabilising role’
The Brics account for a fifth of the world's economic output and 40% of its population. The pool and New Development Bank, with an initial $50bn in capital, are central to their efforts to reshape the Western-dominated financial system.
"At this meeting we will make operational our two biggest institutions, which is key for us to advance as a group and learn more from each other," said a Brazilian official involved in the preparations for the meeting. "Nobody thought that was going to be possible a year ago when we ratified the proposals."
The official asked not to be named as he is not allowed to speak publicly about the two-day summit starting on Wednesday in Ufa, nearly 1 170km southeast of Moscow.
For Putin, whose focus has shifted to the emerging economies and especially Asia since the West imposed sanctions on Moscow over its role in the Ukraine crisis, the summit is also a chance to show the West that Russia can get along fine without it.
"The Brics, in addition to their economic and pragmatic agenda, have become an influential factor in world politics," Russian Foreign Minister Sergei Lavrov said last week.
He denied the five countries' efforts to join forces were aimed against anyone else and praised their "important stabilising role" in international affairs.