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After two years of dogged wrangling, mainly to block China’s ambitions for control,
the new BRICS bank was announced as a reality at the sixth BRICS summit held in Brazil with the five BRICS leaders announcing that the new bank has been capitalized with $50 billion, with equal contributions from all five. While all this is a fairly small step, it remains a highly significant one.
The above introductory comments are edited excerpts from an article* by Anthony Harrington (qfinance.com) entitled BRICS Bank Becomes A Reality – What Next?.
The following article is presented courtesy of Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and has been edited, abridged and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.
Harrington goes on to say in further edited excerpts:
China had argued long and hard that contributions to the new bank – an alternative to what the BRICS say is the overly Western dominated IMF and World Bank – should be based on economic strength but since voting rights follow contribution levels that would have given China control of the New Development Bank (NDB), its official name…
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The five leaders also announced that:
- the new bank would be based in Shanghai, which doubtless pleased the Chinese, who in turn conceded that
- India would preside over the NDB for the first six years of its existence, followed by terms for Brazil, then Russia…
- they would back the NDB with a further $100 billion to act as a currency reserve pool should any member hit liquidity issues.
The NDB’s role will be to fund infrastructure projects in emerging nations, a role that the World Bank and the Asian Development Bank already play to a very significant extent across Africa and Asia. However, the presence of another funder with a real incentive to lend will doubtless be seen as a blessing to any developer or region with a major infrastructure project that needs to be got off the ground.The NDB initiative was first mooted in Delhi in 2012, and represents a fairly stunning victory for the BRICS, who have been saying for some years that they want and deserve a bigger say in the global scheme of things...as the current global financial order is very much a product of the big western powers in the period post the Second World War.
The NDB takes its place as part of a concerted push by the BRICS and Asia generally to do something to formalize the shift in the economic tide from west to east. The Holy Grail, of course, would be for the BRICS in general and China in particular, to succeed in their stated objective of finding an alternative global reserve currency to the U.S. dollar. By comparison with that objective, this is a fairly small step, but it remains a highly significant one.
If it can help to overcome Africa’s chronic infrastructure deficit, for example, then the creation of the NDB will turn into a real blessing instead of being merely the BRICS’ way of “cocking a snook” at the IMF and the World Bank.
Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
* http://www.qfinance.com/blogs/anthony-harrington/2014/07/18/brics-bank-becomes-a-reality-what-next (© Bloomsbury Information Ltd, 2009–13. All Rights Reserved.)
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That’s one small financial step by some men and one giant financial leap for mankind.
The developing world needs all the help it can get, and now it seems they will have additional resources to call upon in their time of need. I’m hopeful that now the New Development Bank (NDB), the World Bank and the IMF will start doing more to reduce the problems facing mankind by making access to such things as fresh water and food easier for everyone since without those we will continue to see ever more strife, which is very costly to everyone involved as well as the planets ecology.