00:00Sitar Tiwari is Associate Fellow at Global Economy and Finance Program at the UK think
00:05tank Chatham House.
00:08I think for 200 years money has had three users, it's a unit of account, it's a means
00:16of payment and it's a store of value in every country from Japan to India to China to Africa
00:24to United States.
00:25So a more local currency is a means of payment and in today's world where the United States
00:37has used the currency and trade as a weapon, it is an insurance scheme.
00:43It's an insurance scheme of being frozen out of the system and that's a good thing.
00:50It reduces transaction costs, it moves money faster but it does not touch either competitiveness
00:59or market access.
01:00And those two issues are fundamental to the growth of BRIC countries looking ahead.
01:11If BRIC countries can make cross-border payments faster, cheaper and more efficient, where
01:17could the biggest benefits be felt first?
01:20I think the biggest benefits will be in remittances.
01:26And the corridor between Middle East and India is huge, about $70 billion.
01:36Similarly, the corridor between Mexico and the United States is huge.
01:44So the first place where they would be felt is in remittances, where frankly the margins
01:54are huge.
01:55I mean, if I move money from here to Africa, sometimes I end up paying 12% on the transaction.
02:04That frankly should be no more than half a percent.
02:08And it affects the poor, it affects people who cannot hedge the movement of money.
02:19So that would be a huge benefit in decreasing transaction costs.
02:25That's it.
02:25So that's why.
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