8 Jul 2015
BRICS plan a $100 bln foreign currency pool – BBH
FXStreet (Barcelona) - The Brown Brothers Harriman Team notes that the BRICS nations – China, Brazil, India, Russia and South Africa have planned a $100 bln foreign currency pool to ensure provision of USD in times of liquidity issues.
Key Quotes
“BRICS central banks have signed an accord on a planned $100 bln foreign currency pool. China will contribute $41 bln, while Brazil, India, and Russia will give $18 bln each. South Africa will contribute $5 bln. Statement said that the pool is meant to ensure provision of USD in case of liquidity problems in the member states.”
“From what we can tell, this is similar to the repo lines set up under the Chiang Mai Initiative, making dollars available for borrowing. We never put much stock in the swap lines because they were really temporary credit lines and didn't really add to the firepower of the central banks that participated. Still, we think this is a good indicator that EM policymakers are starting to gear up for further currency losses by putting more firewalls and circuit-breakers into place.”
Key Quotes
“BRICS central banks have signed an accord on a planned $100 bln foreign currency pool. China will contribute $41 bln, while Brazil, India, and Russia will give $18 bln each. South Africa will contribute $5 bln. Statement said that the pool is meant to ensure provision of USD in case of liquidity problems in the member states.”
“From what we can tell, this is similar to the repo lines set up under the Chiang Mai Initiative, making dollars available for borrowing. We never put much stock in the swap lines because they were really temporary credit lines and didn't really add to the firepower of the central banks that participated. Still, we think this is a good indicator that EM policymakers are starting to gear up for further currency losses by putting more firewalls and circuit-breakers into place.”