All You Need To Know About the BRICS BANK

All You Need To Know About the BRICS BANK

The 6th BRICS summit is the sixth annual diplomatic meeting of the BRICS, a grouping of major emerging economies that includes Brazil, Russia, India, China and South Africa.

It is hosted by Brazil, as the first host country of the current five-year summit cycle the host city is Fortaleza.

The theme chosen for our discussions was "Inclusive Growth: Sustainable Solutions”.

Leaders of the BRICS emerging market nations have agreed to create a multilateral New Development Bank (NDB) for infrastructure needs.

The New Development Bank (NDB), formerly referred to as the BRICS Development Bank, is a proposed 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.

The Bank is setup to foster greater financial and development cooperation among the five emerging markets. It would be headquartered in Shanghai, China and the first chief executive will come from India.

What is New Development Bank (NDB)?

It is a bank set up by the world’s leading emerging economies aimed at funding infrastructure projects in developing nations.

What is the contingent reserve arrangement (CRA)?

The five countries will set up a $100 –bn pool of currency reserves to help countries forestall short-term liquidity pressures.

How will be the CRA be funded?

China, the region’s largest economy, will contribute $41 bn to the CRA. Russia, India, Brazil will contribute $18 bn each, while South Africa will contribute $5 bn.

Where will be the bank based?

The New Development Bank will be based in Shanghai, China.

How will it be governed?

India will preside over its operations for the first five years, followed by Brazil and then Russia. It is scheduled to start lending in 2016.

How will it be funded?

The bank will begin with $50 bn divided equally between its five founder members. Another $50 bn will come from new members.

New areas of cooperation to be explored

- Mutual recognition of Higher Education Degrees and Diplomas;

- Labor and Employment, Social Security, Social Inclusion Public Policies;

- Foreign Policy Planning Dialogue;

- Insurance and reinsurance;

- Seminar of Experts on E-commerce.

ITS GLOBAL PEERS

1. International Monetary Fund (IMF)

History:

·         The IMF was conceived in July 1944 when representatives of 45 countries met in Bretton Woods in the US to establish a framework for International economic cooperation.

Mandate:

·         Its mandate to oversee the international monetary system and promote excahanhe stability among its members countries.

 

Member Countries – 182

Employees – 2,300

Headquarter – Washington DC, US

2. World Bank

History

·         Conceived in July 1944, it is initially focused on electric power and transportation projects, but later diversified its activities, acquiring new insights into the development process.

Mandate:

·         It seeks to promote economic development projects of the world’s poorer countries thorugh long term financing.

Member countries – 180

Employees – 7,000

Headquarter – Washington DC, US

3. Asian Development Bank (ADB)

History

·         Conceived in the early 1960s to foster economic growth and cooperation in the Asian region, ADB opened on December 19, 1966 with 31 members. 

Mandate:

·         ADB provides loans for developing member countries in 5 core areas: infrastructure, environment, regional cooperation and integration, finance sector development, education.

Member Countries – 67

Employees – 3,062

Headquarter – Manila, Philippines

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