$100-Bn BRICS Bank To Be A Reality In 2 Years


Fortaleza: India will have the presidency of the BRICS’ $100-billion new development bank for six years with headquarters in China that will become operational in about two years, a major step for reshaping the international financial system, dominated by the West.

India’s presidency will be followed by Brazil and Russia, who will have a five year term, each under an agreement reached after intense negotiations among the five country-grouping BRICS —Brazil, Russia, India, China and South Africa.

The announcement about the bank and a $100-billion Currency Reserve Arrangement (CRA) that will help countries to deal with short-term liquidity pressures, was made on Tuesday night at the conclusion of the sixth BRICS Summit attended by Prime Minister Narendra Modi, Presidents Vladimir Putin of Russia, Xi Jinping of China, Jacob Zuma of South Africa and Dilma Rousseff of Brazil.

Indian officials said a period of six months had been provided for ratification of the agreement by respective Parliaments of the member-nations, except in the case of India where no Parliamentary endorsement was required. The member- countries have six months thereafter to pay the first of the seven instalments.

Given this time frame, the bank is expected to get going in about two years, officials said.

For CRA, China will contribute the largest amount at $41 billion, followed by India, Russia and Brazil with $18 billion each and South Africa with $5 billion to have a positive precautionary effect, help countries forestall short-term liquidity pressures, promote further BRICS cooperation as also strengthen the global financial safety net.

Announcing the setting up of the bank with headquarters in Shanghai, Rousseff said, “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 International Monetory Fund (IMF).

Source: PTI