BRIC Nations Stop Short of Calling for Dollar Replacement

U.S. retains enough influence with China to keep BRIC from calling for a new reserve currency

The BRIC nations (Brazil, Russia, India, China) just finished up their first ever summit. While swaps were arranged and some talk of replacing the U.S. dollar as the world reserve currency was entertained, the final statement was rather weak. Apparently, China still cares enough about U.S. assets (or rather, keeping the assets it holds somewhat valuable) to keep the lid on any inflammatory remarks about the U.S. dollar.

Indeed, the BRIC nations downplayed their collective economic power and stopped short of calling the U.S. to heel. GFT’s Kathy Lien reports on the BRIC statement in FX360:

Over the past few weeks, there has been a lot of speculation that the BRIC nations could officially call for diversification out of dollars or at least agree to buy each other’s bonds, but the final statement steered clear of any direct threats to the dollar. In fact the statement was very lame and even puts Russia’s credibility in question since their 2 goals of undermining the dollar and pushing for a supranational reserve currency have failed to get the support of China, India and Brazil.