Brics’ to debate possible eurozone aid

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Officials from the leading emerging market economies will meet in Washington next week to discuss potential joint action to help the crisis-hit eurozone, said Guido Mantega, Brazil’s finance minister.

The idea will be discussed at a meeting of the finance ministers and central bank governors of the “Bric” nations – Brazil, Russia, India and China, plus South Africa – on Thursday.

Any concentrated joint effort by the Bric nations to support the eurozone would mark a further symbolic shift in the momentum of the global economy towards the largest emerging markets.

China has the world’s largest foreign reserves – at $3,200bn – while India has more than $320bn of reserves and Brazil over $350bn, providing the grouping with plenty of firepower to support the eurozone’s single currency.

With China already gradually diversifying some of its holdings into euros, a co-ordinated gesture by the grouping would be more symbolic, but would still be welcomed by markets, economists said.

Mr Mantega did not

provide details of any proposals.

However, the Brazilian newspaper Valor Econ?mico reported that the officials would discuss investing more of

their countries’ international reserves in the sovereign debt of Europe’s stronger economies, such as Germany.

The newspaper quoted an unnamed official as saying that while the returns

on euro-denominated debt might be better than those on US treasuries, Bric governments might have trouble selling the idea to a sceptical public, given the turmoil in European debt markets.

If the Brics do reach an agreement on helping Europe, it will not be

their first move to foster closer financial co-operation among themselves.

In April, the development banks of the Brics plus South Africa signed an accord to bolster development lending among their economies.



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