According to Xinhua, at a recent G20 press conference, Zhou Xiaochuan, Governor of the Chinese central bank, discussed the BRICS countries establishing a shared reserve fund. He expressed the belief that such a reserve arrangement represents a major milestone that would also contribute to global financial stability. Zhou suggested that the reserve is an important development in terms of “tangible” cooperation between the BRICS countries as it offers a much better capability to defend against “external shocks.” Zhou revealed that the new reserve arrangement involves a multi-nation currency cooperation based on the currency exchange mechanism. The initial scale of the reserve is US$100 billion with China holding the largest share. Zhou also discussed the negative impact of the U.S. exit strategy from its Quantitative Easing (QE) program. The BRICS countries are Brazil, Russia, India, China, and South Africa. Goldman Sachs was first to use the term.
Source: Xinhua, September 6, 2013