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Sanya, China - The development banks of
the five Brics nations agreed in principle on Thursday to
establish mutual credit lines denominated in their local
currencies, not in dollars.
The framework pact was signed by the heads of the banks on
the sidelines of a meeting of the leaders of Brazil, Russia,
India, China and South Africa on this southern Chinese island.
Vnesheconom Bank, Russia's state development bank, said the
purpose was to boost trade and economic relations among the five
Brics members.
"The agreement is aimed at strengthening financial
cooperation between partner banks, the support of financial
institutions and companies seeking to enter Brics markets,"
the bank said in a statement.
Brazil's BNDES,Export-Import Bank of India, China
Development Bank and the Development Bank of South Africa also
signed the framework accord.
Setting up local-currency credit lines may prove to be of
more symbolic than practical importance, depending on how easy
they are to access and the financing terms. Export-import firms
are used to trading in dollars, the dominant currency in global
commerce.
The Brics, however, are worried about the long-term fate of
the dollar because of America's large trade and budget deficits
and begrudge the privileges that come with being the leading
reserve currency.
To that end, the leaders called in a communique for a
broad-based international reserve currency system "providing
stability and certainty".