The launch of BRICS Development Bank is a huge accomplishment to the member nations, as they have managed to create a monetary system similar to the World Bank. The main success lies in the structure of governance for the Bank which follows the rule of ‘one country, one vote’. The Bank has bestowed each country with equal voting rights in decision making and hence a smaller economy like South Africa will have equal rights as that of China, which incidentally will make the largest contribution to the bank. So this new bank will now play the role of a World Bank for Brazil, Russia, India, China and South Africa!
Here is all you need to know about the new bank of the five BRICS nations.
What is BRICS Development Bank?
The creation of the BRICS Development Bank is a noteworthy step in the global economy for the developing countries. The Bank operated by BRICS (Brazil, Russia, India, China and South Africa) nations is an alternate to the existing World Bank and International Monetary Fund (IMF). The aim of this bank is to generate larger financial and development cooperation among the emerging markets in the five countries. The money would be used for building better infrastructure like roads and airports for the five countries. The bank was named New Development Bank after the suggestion of Prime Minister, Narendra Modi. The move by the developing countries showcases an end to the power of the West and to maintain an equal balance on the weighing scale at least in one aspect in comparison to the superpowers.
How and when did it come into being?
The Bank was born after the 5th BRICS Summit in South Africa on March 27th 2013 with an agreement between the countries. The BRICS countries signed the much awaited document to create the $100 billion BRICS Development Bank with a reserve currency pool of US$100 billion during the 6th BRICS Summit on July 15, 2014. An Agreement of Cooperation and the export credit agencies between the BRICS countries have also been signed.
Where is BRICS Development Bank located?
The Bank would be headquartered in China and the first executive will be from India. The first Chairman of the Board of Directors will be from Brazil while the inaugural Chairman of the Board of Governors will be from Russia. The first bank regional centre will be located in South Africa.
Aim of BRICS Bank
The money invested in the bank would be used for building better infrastructure like roads and airports for the countries. Improving infrastructure in the member countries is the major intend of this association.
The goal is to create a “Contingent Reserve Arrangement” worth $100 billion to retain the member nations from future financial shocks. The bank would also provide help to nations who are suffering from economic crunch. The fund would consist of $10 billion of “paid-in-cash”, which would be a contribution of $2 billion from each country over seven years along wit a additional $40 billion which is to be “paid upon request”.
China would contribute $41 billion while Brazil, South Africa would contribute $5 billion, Russia and India would give $18 billion each.