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New Development Bank (BRICS Bank)

New Development Bank (BRICS Bank)

  • Agreed in 5th BRICS summit held in Durban, South Africa in 2013
  • 6th BRICS summit held in Fortaleza, Brazil, 2014, signed the document for $100 billion BRICS Development Bank and a reserve currency pool worth over another $100 billion
  • Headquartered at Shanghai with African Regional Centre at Johannesburg
  • 1st President – India, Chairman of the Board of directors – Brazil, Chairman of Board of governors – Russians

New Development Bank

Terms & Objectives
  • Primary focus of lending will be infrastructure projectswith authorized lending of up to $34 billion annually
  • Will have starting capital of $50 billion, with capital increased to $100 billion over time
  • Brazil, Russia, India, China & South Africa will initially contribute $10 billion each to bring the total to $50 billion
  • No member can increase its share of capital without other 4 members agreeing – a primary requirement of India
  • The bank will allow new members to join but the BRICS capital share cannot fall below 55%
  • Official Languages – Chinese, English, Russian, Portuguese, 22 official languages of India

 

Initial authorized capital 100 billion
Initial subscribed capital 50 billion (each member gave 10 billion)
Contingency reserve arrangement (CRA) Total 100 billion

  • China 41 Billion
  • Brazil, India, Russia 18 Billion Each
  • S Africa 5 billion
Official language
  • Chinese
  • English
  • Portuguese
  • Russian
  • 22 Official Languages of India

 

Contingent Reserve Arrangement (CRA)
  • Provision of support through liquidity & precautionary instruments in response to potential short-term balance of payments pressures
  • To provide protection against global liquidity pressures including currency issues where members’ national currencies are being adversely affected by global financial pressures.
  • Total $100 Billion – China will contribute $41 billion, Brazil, Russia and India would give $18 billion each, and South Africa would contribute $5 billion

 

 

IMF, World Bank & BRICS
Data IMF World Bank BRICS Bank
By which summit? Bretton Woods, USA 6th BRICS summit at Fortaleza, Brazil
Year 1944 2014, July. Although ops may by 2016.
HQ Washington Shanghai, China.
members 188 188 (IBRD); 172 (IDA) only five
voting power Different voting powers based on Quota system. Differs according to shareholding All five members have equal voting power.
components IBRD, IDA, IFC, ICSID & MIGA
Purpose
  • Loans to solve Balance of Payment (BoP) crisis.
  • Technical assistance in policy making
  • Surveillance over International economy
  • Poverty reduction to 3% by 2030.
  • Soft loans for development projects.
  • Promoting foreign investment and international trade.
  • Loans for infrastructure and sustainable development projects
  • Helping country in balance of payment  (BoP) crisis

 

Why BRICS Bank Born
  • BRICSCollectively 1/5thof World GDP and 2/5th of world population
  • No reforms in IMF or Word Bank Highly dominated by USA & G7
  • To defend BRICS economy from volatility in dollar exchange rate
  • In the long run, it’ll make Chinese Yuan as an alternative to US Dollar, for global financial system

 

RBI Governor Rajan- “we did not setup BRICS bank to challenge World bank and IMF. This bank is setup only to provide “patient money” to BRICS nations, because World Bank and IMF are taking too much time to reform themselves.”

India Yearbook English India Yearbook Hindi Economic Survey 2017

2 Comments

  1. can u mail me notes of mppsc
    modi.bimi@gmail.com

  2. can u pleas mail me notes for MP PSC

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