Emerging nations create alternative bank

A new international development bank being created by the group of emerging economies known as BRICS — Brazil, Russia, India, China and South Africa — is beginning to take shape.

The organization will be based in Shanghai, its first president will be Indian, its first chief executive Brazilian, and its first chairman Russian.

Its mission will be to address “infrastructure deficits and other development needs,” and the reason for its existence is that the World Bank and International Monetary Fund (IMF), which should in theory attend such matters, are not representative enough of developing nations and lack credibility and efficiency, say BRICS countries.

The world is now bilateral, and institutions that represent it should be as well” Brazilian President Dilma Rousseff

The New Development Bank (NDB) will have up to $100 billion (€73 million) to fund projects, and another $100 billion will go to a reserve fund to head off future financial storms.

The decision was taken at the 6^th BRICS Summit, held in the Brazilian city of Fortaleza, and it underscores how a group of developing nations that have experienced significant growth in recent years (although the pace has slowed down lately) are turning their backs on the institutions of developed countries, which are still mired in the crisis.

Brazilian President Dilma Roussef said on Tuesday that the new bank will see BRICS nations “gain density,” while Russian President Vladímir Putin forecast that it will “be the basis for major macroeconomic changes.” Chinese President Xi Jinping said on Monday that the NDB aims to “perfect the system of world government and extend the representation and the right to speak out on international issues of all emerging countries.”

Rousseff added that the NDB is not being created as a snub to the IMF. “It is being created as a favor to ourselves. The world has become bilateral, and the institutions that represent it should be as well.”

The BRICS, a heterogeneous assembly that Brazilian economist José Augusto Castro defines as “a group of letters making up a word and created by an economist,” together represent a fifth of global GDP and 40 percent of the world’s population. They are also home to half of the world’s poor, 1.7 billion people.