Emerging economies meet, agree to rely less on U.S. dollar
STEVE CHIOTAKIS: A group of leading world economies say they’re open to re-evaluating whether the U.S. dollar should be the world’s main reserve currency. Leaders from the five so-called BRICS countries — including Brazil, Russia, India, China and new member South Africa — just wrapped up their one day summit in southern China.
And the BBC’s Juliana Liu is close-by, in Hainan, with more for us. Hello Juliana.
JULIANA LIU: Hi Steve. How are you?
CHIOTAKIS: I’m doing well. The BRICS want to move away from the U.S. dollar. Why?
LIU: If you think about it from their point of view, say you’re Brazil. And you want to trade with China, and you want to sell widgets to China — why should you not settle that trade in your own currency if you can? Why allow yourself to be held hostage to the rates that the dollar is trading against your own currency. So from their point of view, they simply want to minimize risk, and if they are big enough so that their currency can be accepted as the way a settling world trade, why not?
CHIOTAKIS: The U.S. and China — Juliana — have been duking it out over the currency issue for a long time now. Is this just China’s way of sort of using its power to gain allies in that fight?
LIU: I think China is generally using its power to gain allies. Here in China it’s almost accepted that within 10 years or so, the Chinese currency will become freely tradable. It just wants to do it at its own time table, not subject to pressure from outside. I think what you’re seeing now with the BRICS is something far more fundamental. These countries, their economies make up 20 percent of economic activity around the world. They want their voices to be louder in the international monetary system.
CHIOTAKIS: Juliana Liu in Hainan, China. Juliana thank you.
LIU: Thank you.
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