ST PETERSBURG, RUSSIA (REUTERS) - The Brics group of emerging economies will contribute US$100 billion (S$128 billion) to a fighting fund to steady currency markets destabilised by an expected pullback of US monetary stimulus, China and Russia said on Thursday.
China, holder of the world's largest foreign exchange reserves, will contribute the lion's share of the currency pool. But it will be much smaller than the US$240 billion originally envisaged, and officials said it would not be functional for some time yet.
Cheap dollars that fuelled a boom in Brazil, Russia, India, China and South Africa over the past decade have turned tail since Mr Ben Bernanke, chairman of the Federal Reserve, warned in May of a "taper" in the US bond-buying scheme.
"The scale of the reserve arrangement will be US$100 billion and China will take the lion's share of this," China's Vice-Finance Minister Zhu Guangyao told a briefing at the Group of 20 (G-20) summit in St. Petersburg, Russia.
Both Mr Zhu and Russian Deputy Finance Minister Sergei Storchak said details still needed to be worked out, suggesting that - beyond the announcement - much more work would need to be done on the reserve facility.
A joint Brics development bank, with capital of up to US$50 billion, is also still months away from realisation amid disagreements over burden sharing and where it should be based.
Russian President Vladimir Putin was expected to announce the currency pool's size at a meeting of Brics leaders, before the full G-20 gathers later on Thursday to discuss the state of the world economy.
"We have asked not to create unnecessary expectations," Mr Storchak told Reuters regarding the currency pool. "Politically, the countries are ready, but technically they are not. The total is known (US$100 billion), but I don't even know how to come to that."
Last year's original initiative foresaw creating a pool of central bank funds available to Brics facing balance of payments difficulties. There was also a push to create an IMF-style credit line to insure against external shocks.
The Fed is widely expected this month to take its first steps to reduce the extraordinary monetary stimulus, with potentially huge implications for a global financial system where the US dollar accounts for 62 per cent of reserve assets.