India and four emerging countries are sustaining their efforts to change the global economic system, BRIC by brick.
The joint statement of the third BRICS summit being held in Sanya, China, laid out a plan to bring stability to the world economy by increasing their own role in its regulation.
The most radical call of the five countries, the others being Brazil, Russia, China and new member South Africa — now called collectively as BRICS — was for “a broad-based international reserve currency system providing stability and certainty.”
Reflecting China’s reluctance to use the yuan as a global currency and the fact no BRIC currency is convertible, the statement called for the use of SDRs (special drawing rights) and a reworking of the basket of currencies that define the SDR.
Prime Minister Manmohan Singh said, “In a short span of two years since our first Summit in 2009, BRICS has thus travelled a long distance.”
Another chip against the dollar’s rule was a plan to “grant credit in local currencies” between the five economies.
Continuing in this vein of trying to reduce sources of instability that could undermine their growth, the BRICS countries called for efforts to control “excessive volatility” in food, energy and commodity prices. This included global efforts to increase production, spread technology and dampen speculation.
The joint statement also called for financial regulation of cross-border capital flows, a problem facing many emerging economies.
Critics will argue BRICS summits have been talk without the walk. Which is why an action plan was agreed on and a determination to put it in place.
In a major step for the fledgling body, political issues were also discussed, most notably the crisis in Libya and West Asia. The summiteers agreed that what had been endorsed represented “the contours of where we would like to be in the years ahead.”