In Finance, What Is an Emergency Fund?

On the evening of March 26, 2013, the Fifth BRICS Summit opened in Durban, South Africa. At this meeting, the BRIC countries agreed to create a US $ 100 billion emergency fund, and China plans to assume most of the funding. Fund funds will be used in emergencies as an alternative to the IMF. It may take a year for each country to manage this fund, and a final formal agreement will be signed in 2014 at the next summit in Brazil.

BRICS National Emergency Fund

The BRIC countries signed an agreement to launch an emergency fund during the annual summit in South Africa. BRIC finance ministers create $ 100 billion emergency fund ^[4]

Fund funds will be used for emergencies as

Voice of Economy special commentator and general manager of Oriental Huijin Futures Financial Products Division Liu Jin believes that the role of the World Development Bank and the Asian Development Bank is mainly to stabilize the real economy among member countries, such as national level Investment in major projects. The emergency funds proposed by the BRICs in 2013 are closer to the IMF's structure, that is, the International Monetary Fund, which is more effective in stabilizing the currency system of the country and the financial system. , It will come out to help banks and state-level capital, which is closer to the control of the IMF. For example, when the currency exchange rate of a member country is subject to sharp fluctuations caused by foreign hotspot funds, a large amount of funds are needed to stabilize its currency value. At this time, the role of the fund can be shown. In addition, there is a problem with the debt system, similar to the European debt crisis. At this time, this fund can stabilize the country's bond system by purchasing government bonds. ^[1-3]

Zhou Xiaochuan, Governor of the People's Bank of China, particularly emphasized when introducing China's economic and financial situation that the establishment of emergency reserve arrangements by the BRICS countries is a useful supplement to the existing global financial safety net, and is conducive to promoting the financing of BRICS countries and the world stable. Liu Jin believes that what Zhou Xiaochuan has said is clear. The financial order in the international market is actually the Bretton Woods system established by the United States after World War II in 1945, including the International Monetary Fund, the World Bank, the World Development Bank, etc. They are all relics of that time. The characteristic of this is that it is established by the United States and Europeans. The main leaders in it are the United States and Europe. The main leaders of the World Development Bank, the World Bank and the IMF are either Americans or Europeans. They play a leading role. , The interest of the BRICS or emerging countries is very small, it may harm the interests of the BRICS, and take into account the interests of the European Union. The five BRICS countries have established their own financial systems to protect their own interests. This is a useful supplement to the system mentioned by Zhou Xiaochuan. ^[1-3]