-- Agnes T. Crane is a Reuters columnist. The opinions expressed are her own --
By Agnes T. Crane
NEW YORK, June 16 (Reuters) - If you're waiting for Brazil, Russia, India and China to embrace a new global reserve currency, don't hold your breath. For one thing, the meeting on Tuesday of the four leaders of the BRIC nations doesn't even have it on the agenda. According to a draft communiqué, the BRIC nations will not mention the role of the dollar or the creation of a supranational currency despite the back and forth from Russian officials -- and the resulting swings in the value of the dollar on foreign exchange markets -- about whether it would be discussed. The gathering in Yekaterinburg, Russia is soaked in symbolism, however. It is the group's first official powwow and one where the developed nations don't have a seat at the table. This is important since nations like Russia and China, in particular, are chaffing at their dependence on the U.S. and its dollar-denominated debt. Even if the first meeting only sets the groundwork for engagement, it gives these emerging powerhouses a forum to agitate for change, including coming up with alternative to the dollar eventually. In recent months, policy makers from both countries have banged on the dollar diversification drum, suggesting that a new world currency be created to lessen the world's dependence on the U.S. economy and its standard bearer. But, so far it's just been talk. Data released on Monday by the U.S. Treasury Department, underscores the idea that any shift, if it happens, will be gradual. The Treasury International Capital numbers, TIC for short, showed international investors bought $11.2 billion in long-term securities in April. This is down from $55.4 billion in the prior month, but not all that surprising since financial markets were busy rebounding after the Federal Reserve pushed the accelerator further in March. But what's more telling is that large holders of U.S. Treasuries -- like BRIC nations China and Russia -- held relatively steady. China still held $763.5 billion in U.S. Treasury securities -- making it far and away the biggest holder of government bond securities. While that figure was down a smidgen -- what's $4.4 billion among friends -- from the month before, it was still up nearly $20 billion from February. Russia, though further down the rankings, had $137 billion tucked away -- again slightly down from the prior month but still up from February. The short-term problem for all nations who invested their piles of currency reserves into safe havens like U.S. Treasury and agency debt is how to pare back those investments as they seek to become less dependent on the ups and downs of the U.S. economy. Even if there were an alternative, big sales by major holders of U.S. government bonds would send the market into a tailspin -- an unfortunate and likely a catastrophic development when the world is trying to emerge from worst global slump since the Depression. But then, there's still not much of an alternative. Even if nations wanted to diversify into other existing currencies rather than a brand new one, there are still no markets as deep and liquid as the U.S. debt markets to absorb major shifts in reserves. The BRICs alone account for about a third of the world's currency reserves, according to Marc Chandler, global head of currency strategy at Brown Brothers Harriman. That's not to say that a rebalancing of the world's savings and trade will move away from the dollar, but the key word is eventually. For better or worse, we're in this together for a while.
(Editing by David Evans)