* Biggest emerging market powers meet for BRIC summit
* BRICs want faster reform of global financial system
* BRICs call for more say in United Nations
* Russia urges reserve currency discussion, China silent (Adds comment from Brazilian official, paragraphs 8-9)
By Gleb Bryanski and Guy Faulconbridge
YEKATERINBURG, Russia, June 16 (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. [ID:nN16373205]
“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.
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.
“We talked about making the decision-making process on the most important international issues — on the economic agenda, the international political agenda on security — fairer,” said Medvedev in his final statement after the meeting.
“The BRIC summit must create the conditions for a fairer world order.”
The other presidents sat next to Medvedev as he made the final statement. They then departed without making any comments of their own after the summit.
The BRIC nations account for 15 percent of the $60.7 trillion global economy but Goldman Sachs predicts that in 20 years time, the four countries could together dwarf the G7 and China’s economy will overtake the United States in total size.
Medvedev’s chief economic aide, Arkady Dvorkovich, called on the IMF to expand the basket of SDRs to include the Chinese yuan, commodity currencies such as the Russian rouble, Australian and Canadian dollars as well as gold.
The SDR is an international reserve asset allocated to member countries with its exchange rate determined by a basket of currencies, at the moment including the dollar, euro, yen and sterling. A review of the basket is due in November 2010.
“The world economy will grow ... In the future we are sure growth will resume. This growing pie should be divided in a fairer way. We are not talking about excluding the dollar but the share of other currencies should increase,” Dvorkovich said before the meeting.
BRIC leaders would discuss investing their reserves in each other’s currencies, settling bilateral trade in domestic currencies and striking currency swap agreements, he said.
Chinese President Hu Jintao has remained silent on the Kremlin’s currency ideas, which could ultimately indicate more about the divisions of the BRIC club rather than its strength.
The lack of mention of the dollar in the final statement appeared to underline again the differing positions among the BRIC nations about how to reform the world currency system.
Russia has tended to be much more outspoken against U.S. dominance of the financial system than other BRIC nations, which favor a more cautious and diplomatic approach.
The initial response from the developed world to Russia’s initiative came from Japan, where Finance Minister Kaoru Yosano reiterated his view that the dollar will remain the world’s key reserve currency. [ID:nT2262] (For a menu of stories on the BRIC summit, please click on [ID:nBRIC]) (Additional reporting by Oleg Shchedrov in Russia and Todd Benson in Sao Paulo, editing by Stephen Nisbet)