BRICS Contingent Reserve Arrangement

The BRICS Contingent Reserve Arrangement is a framework among Brazil, Russia, India, China and South Africa for providing liquidity and precautionary support in response to actual or potential short term balance of payments pressures. It was created through a treaty signed in Fortaleza, Brazil, on July 15, 2014, and entered into force after ratification at the seventh BRICS summit in July 2015, with a total committed fund size of 100 billion US dollars and lending scheduled to begin in 2016. The arrangement works through central bank liquidity swaps, in which member central banks conduct spot and forward dollar transactions with the central bank of a borrowing member, which repays at predetermined dollar interest rates, and it is often viewed alongside the BRICS New Development Bank as part of an expanding set of financial institutions among developing economies that some observers see as a counterweight to the International Monetary Fund.