BRICS nations sign pacts for local currency facility

New Delhi: In an initiative to promote trade in local currencies, the BRICS nations on Thursday signed two agreements to provide line of credit to business community and decided to examine the possibility of setting up a development bank on lines of multilateral lending agencies.

The agreements were signed by officials of five countries — Brazil, Russia, India, China and South Africa — at the fourth BRICS summit here.

"The agreements signed today by development banks of BRICS countries will boost trade by offering credit in our local currency," Indian Prime Minister Manmohan Singh said in a media statement after the meeting.

The Master Agreement on Extending Credit Facility in Local Currency and the Multilateral Letter of Credit Confirmation Facility Agreement are being perceived as a step towards replacing the dollar as the main unit of trade between them.

Such intra-BRICS initiatives, according to officials, will not only contribute to enhanced trade and investments among the nations but would also facilitate economic growth in difficult economic times.

As regards the initiative to set up a BRICS Development Bank on the lines of multilateral lending agency, Singh said the proposal would be examined by the finance ministers.

"A suggestion has been made to set up a BRICS development bank, we have directed our FM to examine the proposal and report back by next summit," Singh said.

The initiative to set up a BRICS Development Bank on the lines of the World Bank would allow the member countries to pool resources for infrastructure development and could also be used to lend during the difficult global environment.

Intra-BRICS trade is about USD 230 billion and has the potential of more than doubling to USD 500 billion by 2015.