The BRICS nations also called for the integration of their financial markets.
“We agree to facilitate (this) through promoting the network of financial institutions and the coverage of financial services within BRICS countries, subject to each country’s existing regulatory framework and WTO (World Trade Organisation) obligations,” went the joint declaration on Monday.
This will include more cooperation in the areas of swap, settlement and direct investment in local currencies, consistent with each central bank’s mandate. Also on the cards is greater communication between financial sector regulators. The previously created BRICS Interbank Cooperation Mechanism will be playing an important role in this. Agreements between various national
development banks on interbank local currency credit lines and on interbank cooperation in credit rating is expected.
Last month, trade ministers of BRICS nations met in China to discuss economic, trade and investment cooperation. They had approved the outlines for a ‘BRICS Investment Facilitation’, a mechanism to facilitate investments among member nations.
Interestingly, India and China are on opposing ends of the investment facilitation debate at the WTO. China had been actively pushing for a Trade Facilitation Agreement on Investments to be made part of the official agenda at the coming Ministerial conference in Argentina this December. India has insisted any such addition to the agenda must result from a consensus.
The five nations also committed to taking steps on implementing of standards to combat money laundering and terrorism financing.
BRICS finance ministers and central bank governors are to also cooperate on public-private partnerships, including exchanged of experiences and application of BRICS Good Practices.
In his speech during the plenary session, Prime Minister Narendra Modi had called for speedy creation of a BRICS credit rating agency, to cater for the financing needs of developing nations. “Our central banks must further strengthen their capabilities and promote cooperation between the Contingent Reserve Arrangement and the International Monetary Fund,” he said.
The five countries represent 3.6 billion people or about 40 per cent of the world population. The combined nominal gross domestic product was $16.6 trillion in 2015 and $4 trillion in foreign exchange reserves.
Modi also said India was fast changing into one of the most open economies in the world, with improvements on global indices. He pitched the goods and services tax, which unified more than a dozen taxes from July 1, as India’s biggest economic reform ever. “In one stroke, a unified market of 1.3 billion people has been created,” he said.