BRIC Nations Meet, Call For Monetary Diversity

YEKATERINBURG, Russia — The leaders of four major emerging economies _ Russia, China, Brazil and India _ apparently failed Tuesday to reach consensus on reducing the dominance of the U.S. dollar despite growing calls for an alternative global reserve currency.
The four, seeking a greater role in global financial institutions, held the first summit of the so-called BRIC grouping after two days of meetings of the Shanghai Cooperation Organization, another group that Russia has sought to use to reassert its role on the global stage.
Moscow tried to mount a new challenge to the U.S. dollar as the world's reserve currency and Russian President Dmitry Medvedev pushed his call for more global reserve currencies.
"No currency system can be successful if we have financial instruments denominated in just one currency," Medvedev said. "We must strengthen the international financial system not only by making the dollar strong, but also by creating other reserve currencies."
He said that new ones will take long time to emerge, but that "The main reserve currency, the dollar, has failed to serve its purpose."
Later, Medvedev and the other BRIC leaders issued a statement that called for a more diversified international monetary system and a greater role for their four nations in making major global financial decisions.
A reformed financial and economic architecture should be based on a "democratic and transparent decision-making and implementation process at the international financial organizations," the statement said.
Notably, however, the statement made no explicit criticism of the dollar, and contained no reference to developing new reserve currencies.
The cautious wording appeared to reflect China's concerns that any anti-dollar statements could erode the value of its currency reserves.
Analysts said the BRIC proposals were premature and could exacerbate the global crisis.
The BRIC statement does not pose any real threat to the dollar, said Brian Dolan, chief currency strategist at Forex, since it "did not propose any concrete steps toward diversifying away from the dollar," LinkHere