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India follows Russia, ratifies $100 bn BRICS Bank
February 26, 2015, 7:23 am

Chinese President Xi Jinping (2nd R) poses for a group photo with Russian President Vladimir Putin (1st L), Indian Prime Minister Narendra Modi (2nd L), Brazilian President Dilma Rousseff (C), and South African President Jacob Zuma during the sixth BRICS summit in Fortaleza, Brazil, July 15, 2014 [Xinhua]

Chinese President Xi Jinping (2nd R) poses for a group photo with Russian President Vladimir Putin (1st L), Indian Prime Minister Narendra Modi (2nd L), Brazilian President Dilma Rousseff (C), and South African President Jacob Zuma during the sixth BRICS summit in Fortaleza, Brazil, July 15, 2014 [Xinhua]

After the Russian Parliament ratified it last week, the Indian government has also cleared the establishment of the new $100 billion development bank and the $100 billion BRICS Contingent Reserve Arrangement (CRA).

The BRICS Bank launched last year will fund infrastructure projects in Brazil, Russia, India, China and South Africa, and challenge the dominance of the Western-led World Bank and the IMF.

“The new development bank will mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, to supplement existing efforts of multilateral and regional financial institutions for global growth and development,” read an Indian government statement on Wednesday.

“The establishment of the bank would also reflect the close relations among BRICS countries, while providing a powerful instrument for increasing their economic cooperation,” it said.

The Agreement will enter into force and the Bank will begin operations only after all member countries deposit their instruments of ratification with Brazil.

Central Banks of the member countries will also have to finalize an Inter-Central Bank Agreement containing the operational details of swap transactions and the Standing Committee’s Operational Procedures (SCOP) before the arrangement can be operational.

Russia has agreed to provide $2 billion dollars from the federal budget for the bank over the next seven years.

Russian Finance Minister Anton Siluanov is likely to become the bank’s first Chairman of the Board of Governors while India will nominate the first President of the BRICS Bank.

The first board meeting is supposed to take place in April in the Russian city of Ufa and the Bank is expected to start fully functioning by the end of 2015, according to the Russian Finance Ministry.

South African Trade and Industry Rob Davies said last year that although the capital of the New Development Bank and the Contingency Reserve Arrangement had been set at $100 billion each, this did not mean that this capital would necessarily be held in US dollars.

“We want to move away from the same old, same old way of doing things. What currencies the capital will be held in is something that will be part of the Sherpa process with the pace set by Brazil, but we expect substantive progress by the time of the next BRICS summit in Russia in June 2015,” he said.

The BRICS combined GDP grew 300 per cent in the last decade as opposed to 60 per cent growth registered by the developed world.

BRICS launched a $100 billion development bank and a currency reserve pool in July this year in their first concrete step toward reshaping the Western-dominated international financial system.

“For the past 15 years, the BRICS have been seen as the world’s best hope for sustainable growth. These five countries, representing 40 per cent of the world’s population and 25 per cent of its GDP in 2013, recorded growth rates 4 to 5 times greater than those of the US, Europe and Japan, and threatened to displace them as the world’s most important economic powers in another 20 years or so,” say Prof. Ingo Walter and Prof. Roy C. Smith of the New York University, writing for The BRICS Post.

 

 

TBP

5 Responses to India follows Russia, ratifies $100 bn BRICS Bank

  1. bricscorrespondent.com Reply

    February 26, 2015 at 12:52 pm

    I thought each country was supposed to contribute 10bn USD. Now I read that Russia will provide only 2bn USD over the next two years. Given the current economic situation of the country I wonder if it can afford even that.

  2. Roacheforque Reply

    February 26, 2015 at 4:19 pm

    What currencies the capital will be held in is indeed a question of great import. Dollars and SDRs are WB/IMF protocols. I suggest a mix of ruble, yuan, rupee, real and gold, based on equity positions, trade balances and infrastructure agreements already inked.

    Currencies strong gold, favorable balances and future production stake will always trade fairly among member sovereigns, at least until your parallel exchange market is established. But you already knew that.

    This current dollar-pegged FX market/derivative market forces you to play the houses game, when in essence you are constructing your own house, with “like mindset” players.

    By all means, don’t fire the help until you’ve vetted your replacement, but do have that replacement ready to go to work the day you do.

  3. Eve Zamath Reply

    February 27, 2015 at 6:27 am

    It appears that BRICS will not be trading in US dollars, so this will eventually be very detrimental to the value of the US dollar.

  4. Ken Harris Reply

    February 27, 2015 at 9:11 pm

    THIS is a good thing-! If I were a young man instead of an old geeZer with one foot in the grave, I would immigrate to Russia in a heartbeat. God bless Vladimir Putin and the other BRICS.

  5. AntiThesis Reply

    March 28, 2015 at 4:25 pm

    This is an agenda to break away from Western dependency amongst other motives. The 1st world can only prosper if there is a dysfunctional ‘3rd world’ to act as a counterweight to exploit and this is unacceptable.

    No wonder Western establishments (Used as a general term to summarize individual agreements who hold accountability for such implementations.) are determined in destabilizing regions that are of keen interest to the BRICS. Warmongering centered around Economic and Geographical domination.

    I foresee, like all financial institutions, though, a loophole that will eventually become subject to the greed and corruption of those whom will hold positions of power (Whether by Infiltration or Subjugation). I would like to see how such an establishment plans to deal with infidelity that will eventually take place. I admire the ‘Trust’ held between nations but Man’s integrity is always in question and environment always contributes to when and what an individual may define their integrity or lack thereof. Here in the West, the infidelity is seldom dealt with due to many reasons.

    Poverty, imbalance, greed, disparity, false promises, dishonesty, deceitfulness, error <—- These are just a few of many words that attach themselves so intimately to Financial Institutions, please understand that this has been demonstrated throughout the course of History, although understandable the goals outlined, it still does not designate this establishment to be separate from processes that have proven ill in the past time and time again.

    All schemes carried out in duration are eventually exposed. I hope that all intentions are strictly for the benefit of Humanity and not a personal ego trip. 🙂

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