The BRIC countries are holding a lot of foreign assets. Foreign exchange reserves by the three BRIC central banks total $4 trillion dollars. They have an interest in a decline in the risk and uncertainty in the US and the EU. They are at the point that they cannot sell these assets and they really do not want to buy more, but if he also do not want to see their currencies appreciate. Clearly these reserves could be used to reduce some of the fiscal pressures in the current market. In fact, the emerging market central banks may have a more important role than the IMF. The IMF has to follow the lead of the central banks if these institutions want to use their power. However, it may be the IMF who has the will to coordinate and act a central figure in the current crisis.
The high foreign exchange reserves mean that the that BRICs have to be integrated into fiscal discussions in the EU or the US. Neither want to have outsiders involved in their problem, so it will be done behind the scenes, but the creditors and dollar holders will have to agree to future financing. The new stories about the possibility that the Chinese will buy Spanish, Greek or Italian debt has moved the market. The Chinese have been reluctant to make a major move, but their action will change the international finance dynamics. We can easily see emerging markets asking for specific terms before they lend to suspect sovereigns. This could be a part of any lasting deal.
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