China and Brazil have agreed a currency-swap arrangement that enables each country to access up to $30 billion as part of efforts to build a financial buffer to help guard against a freeze up in global markets, according to reports.
Each country will be able to tap the other’s central bank for funds to help bolster reserves in the event of a crisis, according to newswire reports, which cited Brazilian Finance minister Guido Mantega.
Mantega said the fund could be useful in the event of a major liquidity event, noting that global trade foundered in 2008 when the global banking system froze.
With the swap, our trade flows can continue,” Mantega was cited as saying by Dow Jones Newswires.
The agreement was viewed as connected to a 10-year accord designed to promote two-way investment and trade, he said.
The swap agreement was also seen as the first step to a wider pact that could also draw in the other Brics nations of Russia, India and South Africa to participate in the pooling of liquidity, according to Mantega.
The idea of collective pooling of resources was discussed among Brics leaders this past week at the Group of 20 summit in Mexico, he said.
The swap agreement between China and Brazil is expected to be finalised in a few weeks, the reports said.
http://www.marketwatch.com/story/china-brazil-in-30 billion-currency-swap-deal-2012-06-22-6103239?link= MW_latest_news