BRIC demands more clout, steers clear of dollar talk

By Gleb Bryanski and Guy Faulconbridge

YEKATERINBURG, Russia (Reuters) - The leaders of the world's biggest emerging markets demanded a greater say in the global financial system on Tuesday at their first summit, but steered clear of any assault on the U.S. dollar's dominance.

The summit of the so-called BRIC nations of Brazil, Russia, India and China ended with a short statement by Russian President Dmitry Medvedev and a communique that demanded more power for developing nations in international financial institutions and the United Nations.

But it did not mention two key Moscow initiatives -- a smaller role for the dollar and a supranational reserve currency, although a Russian delegation source told Reuters that BRIC finance ministries and central banks were tasked to work on reserve currencies proposals.

"We are committed to advance the reform of international financial institutions, so as to reflect changes in the world economy," the BRIC countries said in a joint communique.

"The emerging and developing economies must have a greater voice and representation in international financial institutions," it said. "We also believe that there is a strong need for a stable, predictable and more diversified international monetary system."

In the run-up to the summit, the Kremlin said the agenda would include the need for more reserve currencies and the expansion of the International Monetary Fund's Special Drawing Rights, or SDRs.

But China -- which holds nearly $2 trillion in foreign currency reserves -- was silent, indicating little unity on any potential challenge to the greenback. With its massive holdings in U.S. dollars and Treasury bonds, Beijing does not want to see the value of its investments go up in smoke.

"Do not expect any short-term initiatives with respect to the dollar," Roberto Mangabeira Unger, Brazil's minister for strategic affairs, told Reuters after the summit.

"Everyone is concerned about the delicacy of this issue," he added. "No one wants to say things or do things that would increase volatility in the circumstance of the crisis."

Analysts say the BRIC four are united by strong economic growth in recent years but not much else. Their political standpoints and global priorities differ widely and diplomats question whether the forum can forge strong, united positions.

The U.S. dollar fell across the board on Tuesday, pressured by the comments from Russia suggesting a need for a global reserve currency other than the greenback.

"The existing set of reserve currencies, including the U.S. dollar, have failed to perform their functions," President Medvedev told a news conference in the Russian city of Yekaterinburg, ahead of the BRIC summit.

"We will not do without additional reserve currencies," he said, adding that a new supranational reserve currency was also an option as the IMF's SDRs gained a bigger role.

BUILDING UP BRIC

The BRIC term was coined by Goldman Sachs economist Jim O'Neill in 2001 to describe the growing power of emerging market economies, but Tuesday's summit was an attempt to give the grouping a bigger voice in the world.