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Bric Economies Make Financial Waves

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Bric Economies Make Financial Waves

As finance ministers and central bank governors met last weekend, ahead of the G20 summit in London on 2nd April, four of the largest developing nations called for more say in the global financial system.

The BRIC nations (Brazil, Russia, India and China) issued a joint statement calling for more lending to emerging economies hit by the collapse of private capital. They also demanded urgent reforms to improve their representation in the International Monetary Fund (IMF) and better reflect their true economic weight. The more developed economies currently dominate institutions such as the IMF and the voting rights of the BRIC countries amount to less than 10% of the total, around half the voting rights of the US.

The G20 meeting of leaders representing the world's most powerful countries will meet in London next month to discuss plans to tackle the current economic crisis. China’s Finance Minister called for joint efforts from the international community to accelerate the reform of international financial institutions and build a new global financial system, which is "fair and square, compatible and orderly". His comments echoed those of Brazil’s President, Lula da Silva last year when he said that the global financial system had "collapsed like a house of cards" in the credit crisis and that a complete overhaul of the system was required with emerging powers like the BRIC countries having more say in key decisions.

Barry Aldridge, Director of Obelisk Private Finance, said that the joint voice of the BRIC economies is getting louder. “It’s a reflection of their growing financial strength and world influence. They are demanding to be heard and, particularly in the case of Brazil and China, don’t want their new-found economic health affected by the global economic crisis.”

The G20 leaders will discuss how to prevent a slide towards protectionism, as well as the possibility of further interest rate cuts, more government spending and stronger international regulation of banks and financial institutions. The UK’s Prime Minister Gordon Brown, who will host the G20 summit on 2nd April, said that "massive change" was about to take place in financial market regulation.
 

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