Putin tells G20 summit emerging economies to contribute €100bn to currency stabilisation fundThursday 05 September 2013 23.00
The BRICS group of emerging economies is to contribute $100bn (€76bn) to a fund to steady currency markets destabilised by an expected pullback of US monetary stimulus, Russian President Vladimir Putin has said.
China, holder of the world's largest foreign exchange reserves, will contribute the bulk of the currency pool.
However, it will be much smaller than the $240bn originally envisaged and officials said it would not be functional for some time.
US Federal Reserve Chairman Ben Bernanke warned in May that the US bond-buying scheme that fueled a boom in Brazil, Russia, India, China and South Africa over the past decade would taper off.
"The initiative to establish a BRICS currency reserve pool is at its final stage," Mr Putin said in opening remarks to a meeting of BRICS leaders during a Group of 20 summit in Russia's second city, St Petersburg.
"Its capital volume has been agreed at $100bn. Russia has made a decision to contribute," Mr Putin added, without specifying a figure.
Earlier, China's Vice Finance Minister Zhu Guangyao said that Beijing "will take the lion's share of this".
Both Mr Zhu and Russian Deputy Finance Minister Sergei Storchak said details still needed to be worked out, suggesting that - beyond the announcement - much more work would need to be done on the reserve facility.
A joint BRICS development bank, with capital of up to $50bn, is also still months away from realisation amid disagreements over burden sharing and where it should be based.
"We have asked not to create unnecessary expectations," Mr Storchak said regarding the currency pool.
"Politically, the countries are ready, but technically they are not. The total is known but I don't even know how to come to that," Mr Storchak said.
Last year's original initiative foresaw creating a pool of central bank funds available to BRICS facing balance of payments difficulties.
There was also a push to create an IMF-style credit line to insure against external shocks.
The Fed is widely expected this month to take its first steps to reduce the extraordinary monetary stimulus, with potentially huge implications for a global financial system where the US dollar accounts for 62% of reserve assets.