The BRICS Summit at Fortaleza, Brazil has decided to set up a new international bank aiming to make international banking more “democratic”, with the joint funding of member nations -Brazil, Russia, India, China and South Africa. Proposed last year by India, the basic formats of the Bank have been decided in the opening meeting of the present summit. The Bank will be set up with an initial capital of $50 billion to be equally contributed by member nations. The capital could be raised to $100 billion.
The Bank will be established after the legislative approval of member nations. The Bank will be based at Shanghai, the first presidency of the organization will be held by India. Other members too have been given control of bank affairs. First Chairperson of Board of Governors will be from Russia. First chair person of Board of Directors will be Brazilian. There will be a special Africa Regional center of the Bank at South Africa.
“We took the historic decision to create the BRICS bank and the reserve agreement — an important contribution to reconfigure the system of international economic governance, The BRICS are gaining political weight and demonstrating their role in the international arena, ” Brazilian President Dilma Rousseff said making the announcement. She has also appealed for reforms at the IMF “to reflect the unquestionable weight of emerging countries.”
The drawing powers of member nations from the fund vary, with South Africa given the option to draw double it’s contribution. Option of lending to non-BRICS nations is left open, with Argentina particularly looking at joining the group and also looking for financial assistance.
BRICS countries account for 40% of world population, around 20% of global economy, 16% of global exports currently.