Russia, China, others urge diverse monetary system
YEKATERINBURG, Russia — Brazil, Russia, India and China on Tuesday called for a more diversified international monetary system, but wrapped up their first full-fledged summit by avoiding any explicit criticism of the world’s dominant currency, the U.S. dollar.
The statement issued by the leaders from the so-called BRIC nations contained no reference to developing new reserve currencies to complement the dollar, which Russia had called for at a separate event earlier in the day. Instead, the cautious wording appeared to reflect China’s concerns that any anti-dollar statements could erode the value of its currency reserves.
“There is a strong need for a stable, predictable and more diversified international monetary system,” the final statement said.
A reformed financial and economic architecture should be based on “democratic and transparent decision-making and implementation process at the international financial organizations,” it said.
The BRIC nations urged the international community to keep the multilateral trading system stable, curb trade protectionism and they stressed a commitment to “advance the reform of international financial institutions to reflect changes in the world economy.”
The group repeated long-standing calls that emerging economies like Brazil, Russia, India and China be given greater representation at major institutions like the International Monetary Fund or the World Bank.
The document called for broader cooperation in the energy sphere, diversifying energy resources and energy transit routes.
It also underlined support for a “more democratic and just multipolar world order based on the rule of international law, equality, mutual respect, cooperation, coordinated action and collective decision making of all states.”
The wording reflected a longtime call by China and Russia, shared by other developing nations, for a bigger say in global affairs to counter what they see as the U.S. domination in global affairs.
The absence of any criticism of the U.S. dollar appeared to be a compromise by Russia. President Dmitry Medvedev said earlier Tuesday that the creation of new reserve currencies in addition to the dollar was needed to stabilize global finances. Those remarks followed comments in March from Chinese Premier Wen Jiabao expressing concerns about rising U.S. budget deficits.
Private analysts said that China, the largest single holder of U.S. Treasury securities, and Russia, which also has extensive holdings in U.S. Treasury debt, were concerned that escalating U.S. budget deficits could undermine the value of those holdings by weakening the exchange value of the dollar.
But analysts said they did not expect other countries to do anything to replace the dollar as the world’s top reserve currency because there is no good alternative.
“For the dollar to lose its place as the world’s top reserve currency, something would have to replace it and there is no obvious candidate out there,” said David Wyss, chief economist at Standard & Poor’s in New York.
“The idea that you are going to create some massive global currency in conjunction with a world central bank is just dumb and politically won’t happen,” Wyss said.
Brazil will host the next summit of the BRIC meeting in 2010.
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AP Economics Writer Martin Crutsinger in Washington contributed to this report.
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