BRICS Countries Want to Use Local Currencies to Do Business Together

07/15/2014 - 08h57

The business communities of the BRICS countries - Brazil, Russia, India, China and South Africa - are considering the use of their local currencies to do business with each other, rather than converting first to another currency, such as the dollar, which generates losses.

The proposal, made by Brazil, was presented in a meeting in Fortaleza on Monday (14), the aim of which was to discuss ways of strengthening economic integration and intensify investment between the five countries.

The meeting of business leaders marks the start of the sixth BRICS summit. The political alliance between the five countries was formalized in 2009, and the business community hopes to make use of this political alliance to forge a practical economic agenda.

Its first action will be to send a report to the heads of state, with their conclusions after a year of dialogue and some proposals for practical action.

For Robson Braga de Andrade, president of the National Confederation of Industry (CNI, in its Portuguese acronym), the use of local currency will reduce transaction costs.

"An important initiative will be to exchange currency directly between BRICS countries. This will reduce transaction costs and facilitate negotiations between the countries concerned. In future deals we will able to trade yuan for rubles, or reais for South African rand, for example."

"It will reduce costs and increase the influence of the bloc," Andrade added.

The business community would also like to see visa restrictions between the countries eased, as well as the standardization of technical norms.

In addition, they are also optimistic that the BRICS Development Bank, which is due to be launched at this summit, will facilitate trade, business and investment, with the use of local currencies in deals between the countries.

"The bank will be responsible for the money involved in these transactions. This will be fundamental for the establishment of Brazilian companies abroad, for example" said Andrade.

The institution will focus on financing infrastructure and sustainable development in other developing countries - not only amongst BRICS members.

The bank's starting capital will be US$50 billion, which may be increased to US$100 billion. The consensus amongst the five countries is that each will contribute equally, although China is keen to increase its involvement.

According to a CNI prediction, representatives from 602 companies will try to do business, with the potential of generating US$3.9 billion.

At the summit, there are teams present from Brazilian companies such as Banco do Brasil, Vale, Gerdau, BRF and Marcopolo, among others, while just some of the areas of interest covered include agribusiness, infrastructure, logistics, transport, energy and the green economy.

Translated by TOM GATEHOUSE

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	Xu Zijian/Xinhua
	The business communities of the BRICS countries are considering the use of their local currencies to do business with each other