China to inject $41 billion to BRICS FX pool

A journalist takes photo at an international press center of the 7th BRICS and the 15th Shanghai Cooperation Organization (SCO) summits, UFA, Russia, July 7, 2015. [Photo/IC]

China will contribute $41 billion to a BRICS currency reserves pool which aims to ensure the central banks of BRICS members can provide US dollars to each other in case of dollar liquidity problems, said a statement by the Bank of Russia.

The central banks of BRICS countries signed an operational agreement on the BRICS pool of currency reserves on Tuesday in Moscow, Russia's central bank said in the statement.

Elvira Nabiullina, the Russian central bank's governor, described the pool created by the group of emerging economies as an "insurance instrument" that members could draw on if they experienced problems with their balance of payments, Reuters reported.

China is the largest contributor to the total pool of $100 billion, of which Brazil, India and Russia will contribute $18 billion each and South Africa will contribute $5 billion, according to Russia's central bank.

China's foreign exchange reserves stood at $3.73 trillion as of the end of March, according to data from the State Administration of Foreign Exchange.

Member states' official reserves would only shrink if a member state applied for help, Nabiullina was quoted in the Reuters report. In that case, BRICS states would contribute proportionally from their reserves to provide forex liquidity to the applicant, she said.

Reuters contributed to this story.