BRICS (Brazil, Russia, India, China and South Africa) nations on Monday have explored mechanisms, such as swap arrangement and a reserve fund to protect their currencies against external risks. They have jointly taken this decision at the sideline of G20 summit.
'The leaders agreed to ask their Finance Ministers and Central Bank governors to work on this important issue, in a manner compatible with internal legal frameworks, and report back to the leaders at the 2013 BRICS Summit,' news sources reported.
Under swap arrangements, one country with a weaker currency seeks to hedge the exchange rate risk by swapping it with another currency with the hope that the transaction will be settled when the situation improves.
Besides Manmohan Singh, the meeting was attended by Brazilian President Dilma Rousseff, Russian President Vladimir Putin, Chinese Premier Wen Jiabao and South African President Jacob Zuma.
The leaders primarily discussed the current global financial crisis and felt the trouble in Eurozone threatened financial and economic stability across the world, and required cooperative solutions.
In this context, they agreed to increase their contributions to global financial institutions such as the International Monetary Fund. India, later announced $10 billion to the institution.
--With IANS Inputs--
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