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MOSCOW, July 7 (Reuters) - Russia’s contribution of $18 billion to a BRICS currency reserves pool will not reduce the country’s official reserves until a member state applies for help, the head of the Russian central bank said on Tuesday.
The central banks of Brazil, Russia, India, China and South Africa signed an agreement on the BRICS pool of currency reserves earlier on Tuesday. It is intended to ensure the central banks of BRICS members can provide U.S. dollars to each other in case of dollar liquidity problems.
Elvira Nabiullina, the Russian central bank’s governor, described the pool being 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.
The pool is worth $100 billion in total, of which China will contribute $41 billion, Russia’s central bank said in a statement. Brazil, India and Russia will contribute $18 billion each and South Africa will contribute $5 billion.
“Eighteen billion dollars from our gold and forex reserves is a very small amount,” Nabiullina told a news conference. “We aren’t making any initial contributions ... That money will stay in our reserves”.
Russia’s gold and foreign exchange reserves stood at $362 billion as of the end of June, according to the central bank data.
Member states’ official reserves would only shrink if a member state applied for help, Nabiullina said. In that case, BRICS states would contribute proportionally from their reserves to provide forex liquidity to the applicant, she said.
Nabiullina also said she saw no need for Russia to draw foreign exchange from the reserves pool in the near future and added that other countries were not supposed to join the scheme. (Reporting by Elena Fabrichnaya; Writing by Alexander Winning and Polina Devitt; Editing by Jack Stubbs and Larry King)