BRICS nations (Brazil, Russia, India, China and South Africa) on Thursday inked two pacts to push intra-country trade in their local currencies and agreed on a joint working group to set up a development bank.
The move is seen as a combined effort to deal with problems of a bumpy world economy hit by sovereign debt worries in many European countries and protectionist tendencies of some developed countries.
The development banks of the five middle-income influential group of nations signed a master agreement on extending credit facilities in the local currency and the BRICS multilateral letter of credit confirmation facility agreement.
The participating banks include the Export Import Bank of India, Banco Nacional de Desenvolimento Economico e Social of Brazil, State Corporation Bank for Development and Foreign Economic Affairs of Russia, China Development Bank and Development Bank of South Africa.
The pact intends to tackle the demand for fully convertible currencies for transactions among BRICS nations, and thereby help reducing the transaction costs of intra-BRICS trade.
Outgoing World Bank president Robert Zoellick, on a visit to India currently, told Reuters late on Wednesday that there are already a series of regional development banks and many nations have their own such banks, but if a BRICS bank was formed, the World Bank will work closely with it.
The pacts are aimed at expanding intra-BRICS trade from the current $230 billion (about Rs ,50,000 crore) to $500 billion (about Rs 25,00,000 crore) by 2015.