The 5-nation BRICS group today signed an agreement to create a USD 100 billion pool of foreign- exchange reserves to help each other “in case of any problems with dollar liquidity”, with India chipping in USD 18 billion.
India’s contribution of USD 18 billion to the Pool will be same as that of Brazil and Russia. China would put in the maximum of USD 41 billion, while South Africa would chip in USD 5 billion.
“The central banks of Brazil, Russia, India, China and South Africa have signed Operational Agreement on July 7, 2015 in Moscow. The Agreement outlines the terms of mutual support for member states in the framework of the Agreement on BRICS Pool of Conventional Currency Reserves,” the Russian Central Bank said in a statement.
The fund will be an “insurance instrument” that members nations could draw on if they experience problems with their balance of payments.
The Pool will go into force on July 30. No new members are planned to be included in it.
The Operational Agreement details working procedures of the Pool to be observed by BRICS central banks, and defines their rights and obligations.
“The Pool is tasked to ensure mutual provision of US dollars by the central banks of BRICS members in case of any problems with dollar liquidity. Thus, this new insurance network is designed to maintain financial stability of its member states,” the statement said.
The Agreement on setting BRICS Pool of Conventional Currency Reserves was signed on July 15, 2014 at the summit in Fortaleza (Brazil).