BRIC aims for bigger global role

Russia and Brazil were vocal before the summit about the need to reduce the role of the American dollar. However, the final communique was silent on this subject.

That could well reflect China's influence. While China, too, has suggested a new reserve currency to replace the dollar, it realizes that the time is not yet ripe and it has no intention of confronting the new Obama administration on this issue.

And China's voice within the grouping is one of the strongest. After all, China's GDP is roughly the size of the three other countries combined.

However, within days of the ending of the summit, China made it clear that it remains dissatisfied with the dollar's global domination. The People's Bank of China repeated its call for the creation of a new super-sovereign currency to replace the dollar as the world's reserve currency.

China's central bank said there were serious defects in one currency dominating the global monetary system. It urged closer supervision of countries that issue the main reserve currencies.

Clearly, change is afoot and China wants to shape a new financial system that will be seen by emerging countries as more equitable. This is likely to happen in any event. Jim O'Neill, head of global economic research for Goldman Sachs, the man who coined the term BRIC, now predicts that “in less than 20 years, the combined GDP of the BRIC countries could be as big as the G-7.”

When that happens, there would have been a major shift in the balance of the world's wealth. The BRIC countries, by then relatively wealthy, will surely have a bigger voice. It remains to be seen, however, whether the poorer countries of the world will still be clamoring that their views are not sufficiently represented in global financial councils.

Frank.ching@gmail.com

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