BRICS WANT MORE INFLUENCE

The Summit of the five BRICS nations which took place on the Southern Chinese Island of Hainan concluded on the 14th of April, 2011 with a joint Communiqué calling for a reform of the United Nations Security Council. The leaders of Brazil, Russia, India, China and South Africa also called for stronger regulation of commodity derivatives to dampen excessive volatility in food and energy prices, which they said posed new risks for the recovery of the world economy. According to them, the recent financial crisis had exposed the inadequacies of the current monetary order, which has the US Dollar as its linchpin. The BRICS leaders averred that what was needed was a broad-based international reserve currency system providing stability and certainty, which can be interpreted as a criticism of Washington's neglect of its global monetary responsibilities.

The Development Banks of the five BRICS nations also agreed to establish mutual credit lines denominated in their local currencies and not in the US Dollar. The Head of the China Development Bank (CDB), Mr. Chen Yuan, stated that he was prepared to lend up to 10 billion yuan to fellow BRICS countries and his Russian counterpart said he would be willing to borrow the yuan equivalent of at least US$500 million via the CDB. The BRICS leaders further reviewed the global role of the Special Drawing Right (SDR), the IMF's accounting and reserve asset, which some experts believe could grow into a partial substitute for the US Dollar. But they avoided the issue of whether the Chinese yuan should join the SDR, saying only that they welcomed the discussions on the composition of the SDR's basket of currencies. The SDR currently comprises of the US Dollar, the Euro, the Japanese Yen and the British Pound Sterling.

On the topic of capital flows, the BRICS countries called for more attention to the risks posed by massive cross-border flows of money. The Summit was the third for the group and the first to include South Africa.