While China will contribute the lion's share of the $100 billion currency reserve fund, to be set up by the BRICS nations to fight currency shocks, in the event of an early taper of stimulus by the US Federal Reserve, no timelines have been set by which the fund will be in place, Sujatha Singh, foreign secretary, said on Thursday. "Several aspects remain be finalized, so there can be no timelines," Singh observed.
Singh told newspersons that all the BRICS nations had expressed concern on the negative spillovers of unconventional monetary policies. The foreign secretary said prime minister Manmohan Singh had welcomed the Currency Reserve Agreement (CRA) saying it had acquired greater salience amidst global currency volatility.
The BRICS nations met informally on Thursday on the sidelines of the G20 Summit.
Meanwhile, both China and Russia have called for policy action by India to tackle its external deficit, an agency said in a report. Singh, however, declined to comment on the remarks made by Chinese Vice Finance Minister Zhu Guangyao, as reported by the news agency. "We see the temporary difficulties of some BRICS countries, mainly as difficulties in terms of international balance of payments," Zhu said in the Reuters report.
"The policy options in response to such ... difficulties include increasing interest rates or devaluing currencies."
I would rather not comment on this," Singh said. India's currency has depreciated sharply since May 22, when the Fed first hinted it might start tapering its buyback of monthly bond purchases of $85 billion; the taper could begin as early as September.
The New Development Bank (NDB) will have an initial subscribed capital of US$ 50 billion from the BRICS countries. The Contingent Reserve Arrangement (CRA), as agreed upon in Durban, will have an initial corpus of $100 billion with the commitment from China at $ 41 billion and Brazil, India, and Russia contributing$ 18 billion each. South Africa will chip in with$ 5 billion.