Leaders of BRICKS, a block constituted by emerging markets, set up a $100 billion development bank and a currency reserve on Tuesday in a solid move aimed at redefining the Western-controlled global financial system.
The bank that’s intends to finance infrastructure projects in developing countries will have its capital in Shanghai, with its first president for the first five years coming from India, followed by Brazil and Russia, leaders of the five-nation organization declared at a summit.
The bank established a $100 billion currency reserves pool to be utilized by countries in preventing short-term liquidity shortfalls, reports Reuters.
The bank, which has been long coming, will be called New Development Bank.
“It will help contain the volatility faced by diverse economies as a result of the tapering of the United States’ policy of monetary expansion. It is a sign of the times, which demand reform of the IMF,” she told reporters at the close of the summit,” Brazilian President Dilma Rousseff told reporters at the end of the summit.
The step is the first substantial accomplishment by the BRICS nations, which comprise of Brazil, Russia, India, China and South Africa, since they joined hands in 2009 to command a bigger control in the global financial system created by Western powers after World War II and revolving around the International Monetary Fund and the World Bank.
The BRICS resulted to cooperation following a cut of capital from emerging markets last year, initiated by the tapering of US economic stimulus.
According to Economic Times, Russian President Vladimir Putin praised the agreements as a substantial way to forestall new economic turmoil.
The five emerging markets first revealed their intentions last year. The New Development Bank is set up to compete with the World Bank in the US while the reserve is seen as a smaller version of the IMF.
To contact the reporter of the story: Yashu Gola at firstname.lastname@example.org
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