(Bloomberg)-The BRICS countries again failed to take great steps in the cross-border payment system for trade and investment that they had been discussing a decade ago.
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In a statement issued during the start of their meeting in Brazil on Sunday, the leaders adhered to additional talks about the possibility of a trade integration greater than the bloc 10 countries.
The statement says: “We are invoking the ministers of the province in the field of finance and the rulers of the central banks, as necessary, to continue the discussion on the BRICS payment initiative.” A poll will be presented by the Brazilian Central Bank at the two -day Rio de Janeiro summit.
Despite the group’s aspirations, progress was slow – and the global trade wave may turn quickly so that it may be impossible to catch up with it.
It is a lost opportunity for Brexis as the dollar is under constant pressure from president Donald Trump’s wrong policies. Greenback has achieved the worst beginning for a year since 1973, when Trump’s trade war and attacks on the Federal Reserve frequency were to drop interest rates in market prices, questioning the long -standing performance of American assets and sending investors who flee in search of alternatives. She has created a blessing for emerging markets that merchants expect to extend more.
While all members support the idea of payments across the border, they were first martyred in the statement of the 2015 bloc summit, the technical aspects of integration are complex. Three people said he was familiar with discussions. They said it would take some time to adapt these, adding that it is unlikely to happen any time soon.
Road barriers
Discussions include payment mechanisms, types of currencies used, how to implement infrastructure and how to exchange costs. Two people said that there are security concerns about integrated systems, adding that the recent expansion of BRICS may also cause delay.
One person said that the fact that many currencies of the bloc are not convertable, and that the current sanctions on the member states of Iran and Russia increase the complexity of discussions. Some countries may argue that the cost involved in establishing and preserving a unified system will not be justified due to what they already have in terms of bilateral trade, adding another. They all ask not to specify the details of the participation of private conversations.
On the one hand, China has benefited from American chaos and launched a comprehensive campaign to promote Yuan’s global role. In a speech last month, the governor of the Chinese Central Bank that Gongcheng has set a vision in which financial markets in the country are more open and the yuan plays a major role in the world’s capital flows.
Beijing explores the launch of the country’s first local currency future, which can compete with similar hedge tools in foreign markets such as Singapore and Chicago, and expanding its payment system, known as CIPS, to cover more foreign banks.
Trump is a reaction
The BRICS leaders also reaffirmed their commitment to expanding the financing of local currencies, diversifying the sources of financing and enhancing cooperation in trade to enhance comprehensive growth and sustainable development.
A document obtained from Bloomberg, which determines the latest thinking by the bloc, shows that discussions about a new investment platform called NIP are likely to be like.
The statute is seen as a potential to fill the gap in financing development, providing more flexibility and reduces dependence on hard currency financing. But “given a variety of methods and proposals that have been raised, and the complex nature of the problems involved, the additional artistic dialogue will be necessary to pay a common understanding of the potential additional value of the statute and operational framework.”
Trump threatened 100 % slaps on the BRICS if you got rid of the dollar in bilateral trade. The reaction, in turn, stimulated the benefit to develop local payment systems and other tools that can facilitate trade and investment between countries.
Many officials said that the idea of giving up the dollar and establishing a joint currency of the mass is not under discussion. Three people said that the response of the US leader did not postpone the Brex talks to integrated systems.
“One of the ways to bring the two countries closer is to reduce the costs of financing for commercial operations. One of the ways to use more local currencies.” “The banks say, based on the period when the process is carried out, you may need to use the rate that turns Renminbi to the dollar. But the goal is that you do not have it one day.”
If there is a liquid market, “you will have a direct exchange rate actually Renminbi, Real-Rupee, Real Rand,” she said. “But this will depend on whether you have a critical block and a volume of commercial investment.”
High rates
BRICS also refers to the additional challenge provided by “fluctuations in financial and monetary policies in some advanced economies” for countries that are already struggling with high levels of debt. “High interest rates and the most strict financing conditions increase debt gaps in many countries,” she says.
The mass is also in discussions to create a multilateral guarantees initiative that focuses on improving “creditworthiness in the BRICS and Southern Global”. The initiative, which is called BMG, will be cursed inside NDB and begins without additional capital contributions, according to the statement.
-With the help of Alan Kroford.
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