BRICS weigh buying euro-denominated debt: source

BRASILIA Tue Sep 13, 2011 7:30pm EDT

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BRASILIA (Reuters) - The BRICS major emerging economies are in preliminary talks on increasing their holdings of euro-denominated bonds to help ease Europe's debt crisis, a senior Brazilian government official told Reuters on Tuesday.

The talks are still in a "preliminary stage," said the source, who asked not to be identified because the negotiations are ongoing. The BRICS group comprises Brazil, Russia, India, China and South Africa

The official said any action would not involve "the majority" of countries' reserves, but did not provide additional details.

Another government official said Brazil did not intend to use its around $355 billion in international reserves to buy European debt but could use its sovereign debt fund, which is allowed to take on more risky investments.

The sovereign fund had a value of 15.4 billion reais ($9 billion) in August, most of which was tied up in stock investments. The source said it could receive a capital boost from the Treasury as part of any assistance plan.

Brazilian Finance Minister Guido Mantega said finance ministers and central bank presidents from the BRICS members would discuss the euro zone crisis at a September 22 meeting in Washington.

"We're going to meet next week in Washington, and we're going to talk about what to do to help the European Union get out of this situation," Mantega told reporters in Brasilia.

Before the meeting, Mantega intends to discuss proposals with his BRICS colleagues by telephone, said another Brazilian source with direct knowledge of the issue.

Brazilian financial newspaper Valor reported earlier on Tuesday that purchases could be limited to debt from the more financially solid European nations.

The second source cast doubt on the ability of the diverse BRICS group to coordinate an assistance plan.

"How could we coordinate BRICS action if there is no coordination in Europe," the official said.

The euro zone debt crisis has roiled global markets for more than a year, with speculation mounting that Greece could default or even exit the 17-nation euro zone monetary union.

Central banks in Brazil and South Africa declined to comment.

(Reporting by Raymond Colitt and Tiago Pariz in Brasilia, Luciana Lopez and Brad Haynes in Sao Paulo and Phumza Macanda in South Africa; Editing by Stuart Grudgings and Andrew Hay)

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