Difference between revisions of "New Development Bank"

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The BRICS Development Bank[1] is a multilateral development bank operated by the BRICS states (Brazil, Russia, India, China and South Africa) as an alternative to the existing World Bank and International Monetary Fund.[2] The Bank is setup to foster greater financial and development cooperation among the five emerging markets. It is headquartered in Shanghai, China[3] and the first Chief Executive will come from India.[3]

History

The BRICS Development Bank was agreed to by BRICS leaders at the 5th BRICS summit held in Durban, South Africa on 27 March 2013.[2]

On 15 July 2014, the first day of the 6th BRICS summit held in Fortaleza, Brazil, the group of emerging economies signed the long-anticipated document to create the $100 billion BRICS Development Bank and a reserve currency pool worth over another $100 billion.[4] Both will counter the influence of Western-based lending institutions and the dollar. Documents on cooperation between BRICS export credit agencies and an agreement of cooperation on innovation were also signed.[5]

Shanghai was selected as the headquarters after competition from New Delhi and Johannesburg.

The first president will be from India,[6] [7] the inaugural Chairman of the Board of directors will come from Brazil [8] and the inaugural chairman of the Board of Governors will be Russian.[8]

Structure and Objectives

Development Capital

The bank's primary focus of lending will be infrastructure projects [9][10] with authorized lending of up to $34 billion annually.[11] South Africa will be the African Headquarters of the Bank named the, "New Development Bank Africa Regional Centre".[12] The bank will have starting capital of $50 billion, with capital increased to $100 billion over time.[13] Brazil, Russia, India, China and South Africa will initially contribute $10 billion each to bring the total to $50 billion.[14][15] Each member cannot increase its share of capital without all other 4 members agreeing. This was a primary requirement of India.[16][17] The bank will allow new members to join but the BRICS capital share cannot fall below 55%.[18]

Contingent Reserve Arrangement (CRA)

The objective of this reserve is to provide protection against global liquidity pressures.[19][20][21] This includes currency issues where members' national currencies are being adversely affected by global financial pressures.[22][23][24]

The Bank would also provide assistance to other countries suffering from the economic volatility in the wake of the United States' exit from its expansionary monetary policy.[25]

This fund will consist of $10 billion of "paid-in capital" ($2 billion from each member to be provided over seven years) and an additional $40 billion to be "paid upon request".[26] Out of the total initial capital of $100 billion, China will contribute $41 billion, Brazil, Russia and India would give $18 billion each, and South Africa would contribute $5 billion.[27] It is scheduled to start lending in 2016 and be open to membership by other countries, but the capital share of the BRICS cannot drop below 55 percent.[28]

Notes and references

  1. ↑ "BRICS Bank to be headquartered in Shanghai, India to hold presidency". Indiasnaps.com. 16 July 2014
  2. ↑ a b Powell, Anita. "BRICS Leaders Optimistic About New Development Bank". Voice of America. Retrieved 27 March 2013.Page Module:Citation/CS1/styles.css must have content model "Sanitized CSS" for TemplateStyles (current model is "Scribunto").
  3. ↑ a b Lewis, Jeffrey; Trevisani, Paulo. "Brics Agree to Base Development Bank in Shanghai". The Wall Street Journal. Retrieved 16 July 2014.Page Module:Citation/CS1/styles.css must have content model "Sanitized CSS" for TemplateStyles (current model is "Scribunto").
  4. ↑ "Brics nations to create $100bn development bank". BBC.com. 15 July 2014
  5. ↑ "BRICS establish $100bn bank and currency reserves to cut out Western dominance". RT.com. 15 July 2014
  6. ↑ http://timesofindia.indiatimes.com/business/international-business/BRICS-Development-Bank-launched-first-president-to-be-from-India/articleshow/38440605.cms
  7. ↑ "India Gets First Presidency Of The BRICS Bk". Bloomberg TV India.Page Module:Citation/CS1/styles.css must have content model "Sanitized CSS" for TemplateStyles (current model is "Scribunto").
  8. ↑ a b "Brics Agree to Base Development Bank in Shanghai Bank to Finance Infrastructure Projects in Emerging-Market Countries". 15 July 2014. |first= missing |last= (help)Page Module:Citation/CS1/styles.css must have content model "Sanitized CSS" for TemplateStyles (current model is "Scribunto").
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  25. ↑ "BRICS bank to benefit developing countries: Brazilian president". IANS. news.biharprabha.com. Retrieved 15 July 2014.Page Module:Citation/CS1/styles.css must have content model "Sanitized CSS" for TemplateStyles (current model is "Scribunto").
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  27. ↑ "BRICS Development bank top on Agenda of 6th BRICS Summit". IANS. news.biharprabha.com. Retrieved 15 July 2014.Page Module:Citation/CS1/styles.css must have content model "Sanitized CSS" for TemplateStyles (current model is "Scribunto").
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External links


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