Brazil, Russia, China and India pushed for increased global economic reform
Leaders of Brazil, Russia, India and China (BRIC) on Tuesday, 16 June 2009, ended their first summit with the call for emerging economies to have a greater voice and representation in international financial institutions and for a more diversified global monetary system.
Russian President Dmitry Medvedev, Indian Prime Minister Manmohan Singh, Chinese President Hu Jintao and Brazil's President Lula da Silva discussed a host of global issues, including the financial crisis, food and energy security, climate change and international terrorism.
A slew of important decisions and initiatives included: (1) dealing with global food security on a priority basis (2) stepping up efforts to provide liquidity to poorest countries which have been hit hardest by financial crisis (3) promoting sustainable development (4) strengthening coordination in field of energy security (5) more cooperation in the field of science and technology and (6) intensifying efforts for international humanitarian assistance.
The joint statement of the leaders said the emerging economies must have greater voice and representation in global policy making and in currency markets, whose heads and senior leadership should be appointed through an open, transparent and merit-based process.
Leaders also called for comprehensive reform of the United Nations to deal with challenges more effectively and give Brazil and India a greater role. Russia and China are already permanent members of the Security Council.
The BRIC accounts for a little over a quarter of the world's territory, 40% of global population and 15% of the $60.7 trillion global economy.
The term 'BRIC' was coined by Goldman Sachs economist Jim O'Neill in 2001 to describe the growing power of emerging market economies.
The BRIC summit, which was held in the Ural Mountains city of Yekaterinburg in Russia, comes after Brazil, China and Russia announced plans to shift some $70 billion of reserves into multicurrency bonds issued by the International Monetary Fund (IMF), driving Treasuries and the dollar lower.
Experts keenly watched the meeting for clues as to how these countries, which are among the biggest holders of US Treasuries, will manage their reserves. The move was interpreted by some as an attempt to topple the dollar.
Russian officials strongly criticized the global financial infrastructure, saying the dominance of the US dollar risked instability in currency markets. Dmitry Medvedev, the Russian president, said the existing set of reserve currencies had failed to perform their functions.
Medvedev said BRIC should work towards an alternate reserve currency to break the dominance of the US dollar in the international financial markets. He favoured the establishment of more regional reserve currencies, including the Russian rouble and the Chinese yuan, to prevent economic shocks.
But China, which holds nearly $2,000 billion in foreign currency reserves and a large portion of US debt, was silent on the subject. China had suggested in March this year that the dollar could be replaced as the world's main reserve currency.
Russian officials said Yekaterinburg, where Russia has invested in new conference facilities, should host all future BRIC summits. But Russia, China and India later accepted Brazil's offer to host the next summit in 2010. BRIC leaders will meet informally on the sidelines of the G20 summit in Pittsburgh in September 2009.
