BRICS Sign Treaty
A treaty for the establishment of the BRICS Contingent Reserve Arrangement has been signed in the framework of BRICS summit held in Brazil.
BRICS is the acronym for an association of five major emerging national economies: Brazil, Russia, India, China, and South Africa.
As of 2013, the five BRICS countries represent almost 3 billion people with a combined nominal GDP of US$16.039 trillion and an estimated US$4 trillion in combined foreign reserves.
The leaders of the five Brics countries have signed a deal to create a new $100bn (£58.3bn) development bank and emergency reserve fund with Russia’s share amounting to $18 billion.
Governor of the Bank of Russia, Elvira Nabiullina signed the treaty on the part of Russia.
The Treaty provides for mutual financial assistance between BRICS member-states.
According to a statement, the assistance may be furnished through timely provision of liquidity to the requiring country by other participants of the arrangement on the grounds of the country’s balance of payments pressure. This can be manifested in a drop in foreign exchange rate, short-term liquidity shortage and other financial difficulties.
Furthermore, it stated that the establishment of the BRICS Contingent Reserve Arrangement implemented one of the first practical initiatives of the five countries.
“Arrangement development will have positive effect as a precautionary measure and will contribute to strengthening the financial stability of BRICS member-states.
The bank will have a headquarters in Shanghai, China and the first president for the bank will come from India.