THE BRICS CONTINGENCY RESERVE ARRANGEMENT AS A MULTILATERAL GOVERNANCE FRAMEWORK OF GLOBAL FINANCES
The authors analyze the potential and prospects of the Contingent Reserve Arrangement (CRA) recently established by Brazil, Russia, India, China and South Africa (BRICS) in the structure of the contemporary multilateral governance. First, the authors identify key problems of the international monetary system that directly or indirectly led to the development of alternative tools for the mutual country assistance in case of emergency concerning the international liquidity reserves and exchange-rate instability. The need for transformation of the international financial and monetary cooperation is determined by global stagnation that affected most of the world as well as by the developing countries’ need to be promoted in the modern system of international relations in view of an increase in their combined hard and soft power. Second, the study reveals that the BRICS role in the global governance system reflects the general context of relations between the Global North and South. This type of relationship can be called competitive cooperation. Despite a certain discrepancy between the interests of the representatives of the developed and developing world, they interact in a non-conflict way in political, legal and economic sphere. Third, an assessment of foreign exchange reserves of the BRICS countries as well as factors influen- cing their value confirms that the contingent reserves generated mainly by China’s resources possess a potential sustainabil- ity and credibility. Fourth, comparison of the CRA with the International Monetary Fund (IMF) and Chiang Mai Initiative Multilateralization (CMIM) shows that the potential of CRA has to be better evaluated in the context of the East Asian cen- tral banks agreements; while the IMF focuses on the global challenges related to the global trade and international settle- ments on current and capital transactions. From the organizational and functional point of view, the BRICS CRA follows the CMIM operational principles, both mechanisms are characterized by the same tactical goals and objectives as well as by a certain institutional incompleteness. Furthermore, in both cases the member countries do not follow the IMF format of international public legal entity. The evolution of the Chiang Mai Initiative Multilateralization demonstrates that the effec- tiveness of cross-country monetary cooperation largely depends on the amount of funds allocated for bilateral swaps and on the level of institutionalization of relations. The success of such initiatives is also associated with the ability to establish a legal mechanism of performance guarantees for borrowing countries and to develop monitoring procedures similar to those used in the long-time IMF practices. Thus, the prospects of the CRA may be positive if the member countries avoid mis- takes made by the similar institutions of monetary cooperation.