BRICS agree to use local currencies for mutual credit

Member countries of the BRICS forum have agreed to establish mutual credit lines in their own currencies, skipping the existing exchange medium of the dollar.

Development banks of Brazil, Russia, India, China and South Africa today signed a framework agreement to establish mutual credit lines denominated in their own currencies.

Heads of Brazil's BNDES, Russia's Vnesheconom Bank, Export-Import Bank of India, China Development Bank and the Development Bank of South Africa signed the framework agreement on the sidelines of the BRICS summit on the southern Chinese island of Sanya.

Local currency credit will help boost trade among member countries of BRICS, head of Russia's state development bank Vnesheconom Bank said.

"The agreement is aimed at strengthening financial cooperation between partner banks and support financial institutions and companies seeking to enter BRICS markets," the bank said in a statement.

While local currency credit lines may have limited role and are more symbolic in nature, BRICS said the long-term prospect of the dollar as the dominant currency for international trade is a cause of worry.