Development banks from the Brics signed agreements to promote intra-country trade in local currencies at the fourth Brics Summit on March 29 in Delhi.

It is an effort to lower the cost of trade between these Bric nations and ensure the Brics are less dependent on the US dollar.
The Chinese Development Bank, Brazil’s BNDES, Russia’s Vnesheconombank, Export-Import Bank of India and the Development Bank of Southern Africa, signed a master agreement in extending credit facility, and a Brics multilateral letter of credit confirmation facility agreement.

Under the terms of the letter of credit (LC) agreement, development banks will be able to confirm LCs upon receipt of a request from exporters or importers or their respective banks.

The master agreement on extending credit facility in local currency is intended to reduce the demand for fully convertible currencies for transactions among Bric nations.

This agreement comes as Bric nations reveal that they are working on an alternative to the World Bank. The proposed development bank would be funded and managed by Brics and other developing countries.

The new development bank will mobilise resources for infrastructure and sustainable development projects in Brics and other emerging economies and developing countries.

Further updates about the proposals are expected to be announced at the next Brics Summit held in South Africa in 2013.