SANYA: The development banks of the five BRICS nations agreed in principle on Thursday to establish mutual credit lines denominated in their local currencies, not in dollars.
The framework pact was signed by the heads of the banks on the sidelines of a meeting of the leaders of Brazil, Russia, India, China and South Africa on this southern Chinese island.
Vnesheconom bank, Russia's state development bank, said the purpose was to boost trade and economic relations among the five BRICS members.
"The agreement is aimed at strengthening financial cooperation between partner banks, the support of financial institutions and companies seeking to enter BRICS markets," the bank said in a statement.
Brazil's BNDES, Export-Import Bank of India, China Development Bank and the Development Bank of South Africa also signed the framework accord.
Setting up local-currency credit lines may prove to be of more symbolic than practical importance, depending on how easy they are to access and the financing terms.
Export-import firms are used to trading in dollars, the dominant currency in global commerce.
The BRICS, however, are worried about the long-term fate of the dollar because of America's large trade and budget deficits and begrudge the privileges that come with being the leading reserve currency.
To that end, the leaders called in a communique for a broad-based international reserve currency system "providing stability and certainty".
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