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May 18, 2022

BRICS establish USD 100 bn bank to cut out Western dominance

The group of emerging economies signed the long-anticipated document to create the USD 100 bn BRICS Development Bank and a reserve currency pool worth over another USD 100 bn. Both will counter the influence of Western-based lending institutions and the dollar, rt.com informs. The new bank will provide money for infrastructure and development projects in BRICS countries, and unlike the IMF or World Bank, each nation has equal say, regardless of GDP size.
Each BRICS member is expected to put an equal share into establishing the startup capital of USD 50 billion with a goal to reach USD 100 billion. The BRICS bank will be headquartered in Shanghai, India will preside as president the first year, and Russia will be the chairman of the representatives.
“BRICS Bank will be one of the major multilateral development finance institutions in this world,” Russian President Vladimir Putin said on Tuesday at the 6th BRICS summit in Fortaleza, Brazil. The big launch of the BRICS bank is seen as a first step to break the dominance of the US dollar in global trade, as well as dollar-backed institutions such as the International Monetary Fund (IMF) and the World Bank, both US-based institutions BRICS countries have little influence within. Russia, Brazil, India, China and South Africa account for 11 percent of global capital investment, and trade turnover almost doubled in the last 5 years, the Putin reminded. Each country will send either their finance minister or Central Bank chair to the bank’s representative board. Membership may not just be limited to just BRICS nations, either. Future members could include countries in other emerging markets blocs, such as Mexico, Indonesia, or Argentina, once it sorts out its debt burden. Russia has also proposed the countries come together under an energy alliance that will include a fuel reserve, as well as an institute for energy policy.

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