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BRICS nations OK contingency reserve agreement


07-16-2014 17:07 BJT

Full coverage: Xi attends BRICS summit, visits Latin America

This year’s BRICS summit has blossomed in many areas. The member countries agreed on the establishment of a development bank and then they also signed off on a contingency reserve agreement with an initial pool of 100 billion U.S. dollars. 

China will contribute 41 billion dollars to the pool while Brazil, Russia and India will each add 18 billion with South Africa contributing 5 billion. The aim of the reserve agreement is to tackle financial crisis in both emerging economies and around the world. 

"The contingency reserve will mainly serve the members when they face crisis or have abnormal liquidity," Zhou Xiaochuan, PBoC governor said. 

"Once some countries encounter foreign exchange liquidity problems, they can use the reserve to overcome the problems in the short term. But the fund was not designed to fight against such systematic or macro-economic faults. It will work to cushion short-term crisis. Obviously, it will be helpful for the member countries to respond to short-term impacts and stabilize their financial markets."

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