Brazil and China agree currency swap and deepen cooperation

Brazilian and Chinese authorities have agreed to deepen ties between the two countries after plans for a currency swap were revealed on the same day an agreement to increase information sharing about banks was signed.

The Central Bank of Brazil on June 21 announced it had signed a memorandum of understanding with the China Banking Regulatory Commission to enhance the exchange of information related to the supervision of financial institutions. The authorities also concurred on increasing cooperation between the two bodies on matters relating to banking supervision.

The Brazilian central bank hailed the signing a "substantial" breakthrough in relations between the two institutions.

The Brazilian Ministry of Finance also revealed that plans were afoot for a 60 billion real ($29.1 billion) or 190 billion yuan currency swap with China. The agreement will be signed next week, according to a document posted on the ministry's website.

Chinese premier Wen Jiabao made the deal with the president of Brazil, Dilma Roussef, but the "technical conditions" were to be defined by the central banks of the two countries, the statement said. Discussions about the swap were initiated during a meeting of the Brics countries on the fringes of the G-20 gathering in Los Cabos, Mexico. There, the five nations, Brazil, Russia, India, China and South Africa, agreed to investigate the possibility of holding currency swaps between the countries of the group and also of creating a joint reserve pool.

Following the meeting between Wen and Rossef, the Brazilian finance minister, Guido Mantega, announced a 10-year plan of cooperation between Brazil and China, the currency agreement forming part of it.