BRICS Agree to Set Up USD 100 B Development Bank, Emergency Fund
The five BRICS countries are due to create a development bank with USD 50 B in initial capital and an emergency fund, Brazil's President Dilma Rousseff announced.
At a summit staged in the Brazilian city of Fortaleza that kicked off just days after the World Cup finals, the emerging nations' leaders confirmed the project in which they had declared interest to pursue earlier in July.
The idea, however, dates back to 2012's BRICS summit in New Delhi.
China will host the bank's headquarters, and the first president of the institution (for a five-year term) will be Indian, while the board chairman will come from Brazil.
Among the bank's main tasks would be to provide support to developing countries in their infrastructure project.
Its first loan is expected in 2016.
As for the "Contingency Reserve Arrangement", as Brazil, Russia, India, China and South Africa called the fund, it will address issues such as "short-term liquidity pressures" experienced by the five countries and will enhance their cooperation.
It also aims to "strengthen the global financial safety net and complement existing international arrangements," as the BBC quoted Dilma Rousseff as saying.
Prior to the decision, a shadow had been cast on the venture by a dispute between India and China over where the development bank should be based, but discrepancies were smoothed out.
While the bank is envisaged to have an initial focus on BRICS projects and might later expand its activity, the Contingency Reserve Arrangement will serve exclusively the needs of the five countries.
The latest move taken by the BRICS, which have a joint GDP amounting to 21% of the world's total and trade between themselves worth 17 percent, is seen as a challenge to the World Bank and the International Monetary Fund (IMF), two institutions which the emerging nations describe as "Western-dominated".
They also argue both are too focused in its policies and loaning conditions on measures to curb spending.
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