Emerging giants warn dollar at first summit

RUSSIA: Leaders from the world’s top emerging economic powers on Tuesday delivered a warning-shot to the domination of the US dollar as their new forum flexed its muscle at a first ever summit.

The leaders of Brazil, Russia, India and China — dubbed the BRIC nations — called for a “more diversified” currency system after a meeting that came amid growing talk over the dollar’s future as the global reserve unit of choice.

Russian President Dmitry Medvedev hailed the meeting in Russia’s central city of Yekaterinburg as “historic” and said it had met the expectations of his colleagues.

“The summit must create the conditions for a fairer world order,” he added in a final statement read out alongside Presidents Hu Jintao of China, Luiz Inacio Lula da Silva of Brazil and Indian Prime Minister Manmohan Singh.

Their final communique said it “is very necessary to have a stable, predictable and more diversified currency system,” and that the leaders were “committed to advance the reform of international financial institutions, so as to reflect changes in the world economy.”

Medvedev earlier reaffirmed his doubts about the future of the US dollar as the world’s standard reserve currency and called for a major shift in attitude worldwide.

“The current set of reserve currencies and the main reserve currency — the US dollar — have not managed to perform their functions,” he said.

Following the BRIC summit the dollar slid from a month high against the euro in trading in New York, with the euro buying 1.3838 dollars at 2100 GMT compared to 1.3793 dollars late on Monday.

China has backed Russia’s moves for a revamp of the global financial system, saying there is a need for a new supra-national currency besides the dollar to prevent a repeat of the global economic crisis.

Medvedev’s chief economic aide, Arkady Dvorkovich, said Russia could consider investing its reserves not only in the United States and European countries but also in the financial instruments traded by BRIC states.

“This would be absolutely logical, if our partners agreed to place part of their reserves in our Russian instruments.”

YEKATERINBURG, Wednesday, AFP