The new development bank BRICS

2016

The Brics new development Bank (ndB) is set to issue its first loans in the second quarter of 2016. The bank, the latest addition to the global development finance landscape, was initiated due to a number of factors in emerging economies. one of the key issues that emerging economies, including the Brics group, struggle with is the slow pace of reform in existing global financial institutions to better reflect the current political and economic realities (which in some cases deviate significantly from when these organisations were created in the post-second World War era). emerging economies also suffer from serious infrastructure funding deficits, which can be addressed by drawing on the significant domestic savings across developing countries. The ndB was thus born partly as a result of these factors. since its conception in 2011 the bank has begun taking form, including finalising legal arrangements, assigning different roles and responsibilities among the five founding Brics mem...

Establishing a BRICS development bank will require banking acumen, the capacity to embed private incentives into a governmental structure, striking a fine balance between economic development and political sense, impressive diplomatic skills and, quite frankly, luck.

2010

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2019

The author thanks the colleague of Ipea, Claudio Amitrano, and those of the Directorate of Macroeconomic Studies and Policies (Dimac), Lucas Vasconcelos and Saulo Quadro, for the suggestions to the first version of this text. I especially thank to Marcos Antônio Macedo Cintra and Claudio Hamilton Santos for the careful reading and critical comments made during the preparation of this final version. My sincere thanks to Carlos Mussi, Director of the Economic Commission for Latin America and the Caribbean (ECLAC) in Brazil, for hosting the theme and for the support received during my researcher fellow period in this institution from January to March 2017, when I had important contributions from Roberto de Freitas Melo and Marcos Vinicius Chiliatto Leite. A substantial part of the research that resulted in this text was carried out in the Department of Economic Development of ECLAC in Santiago, Chile, so I would like to thank to the director Daniel Titelman and the researcher Esteban Pérez Caldentey for the support, suggestions for the development of the research project. All these people are now entirely exempt from possible inaccuracies and gaps remaining in the version presented here. 2. Planning and research technique at Dimac/Ipea.

2016

The BRICS New Development Bank (NDB) has just begun its operation on infrastructure financing. While long-term speculation on its activities in the uncertain context is hazardously conjectural, it is possible to discuss its short-term implications. If the egalitarian principle-with an equal capital contribution among the BRICS members-should be firmly upheld, the growth of its financing will be determined by its weakest member (South Africa) and by new members (particularly non-borrowers). The former case will hinder the NDB from becoming a major institution and the latter case will dilute the founders' pivotal position in the institutoin. If China, the only founding member with financial clout, should be allowed to raise its own capital base, the NDB's financial capacity will be augmented, but its institutionalized egalitarianism will be compromised. Moreover, if intra-BRICS talks on the capital base and new membership should reveal serious acrimony, they will not only dampen global support but also discourage others to join the NDB. The paucity of creditworthy track record will also oblige the NDB to co-finance with other institutions, which, in turn, will prevent it from lending in a radically different fashion from the conventional practices. If the NDB should appear to fail bringing about major changes in the global financial architecture, many observers will question the merits of reinventing the wheel. Even worse, the NDB will be seen as a smokescreen to hide the exploitation of Southern countries at the best advantage of the BRICS members. At any rate, it is likely that the NDB will expand its operation, but its growth path will be slow and unsteady. At least, in the foreseeable future its effects will not be as significant as many observers have hoped.

Verfassung in Recht und Übersee, 2014

The five fast-growing economies, known collectively as BRICS, have recently announced their intention to create their own development bank. The so-called BRICS Bank will be the first world multilateral development bank controlled solely by emerging economies. This paper asks whether the new bank has the potential to bypass the World Bank, destabilizing the current development finance framework. Specifically, if the BRICS Bank project succeeds, what are the possible scenarios for the field of development cooperation? To map these scenarios, we propose a typology of practices in development finance, drawing from operations of the World Bank and national development banks in Brazil and China. Assuming that the BRICS Bank is likely to adopt one of the practices currently used by Brazil or China, we speculate about the outcomes of the interaction between the BRICS Bank and the World Bank and their respective practices. Acknowledging that it is still uncertain what these outcomes will be, in part due to the uncertainties regarding how the BRICS Bank will operate, this paper provides a map of possible scenarios. *** Introduction: Development Cooperation as an autonomous field The field of development cooperation has been historically marked both by strong continuities and sharp changes of structures and practices. One of these changes is the multiplication of organizations operating in the field. In the aftermath of the Second World War, the first multilateral organizations designed to guarantee the stability of the international financial system and to foster economic development, the International Monetary Fund and the World Bank, A.

2015

Funkcionalan međunarodni monetarni sistem (MMS) treba da obezbedi zadovoljavajuću međunarodnu likvidnost i omogući nesmetane tokove novca i kapitala u svetskoj privredi. U uslovima krize od njega se očekuje da olakša protok kapitala radi eliminisanja neravnoteža koje vode krizi. Osnovna poluga MMS-a u posleratnom periodu bila je konvertibilnost dolara u zlato, što je omogućilo da američka valuta postane svetska rezervna valuta. Monetarna politika SAD je u ovom monetarnom sistemu preuzela ulogu kreatora međunarodne likvidnosti. Kad je 1971. godine američki predsednik Nikson ukinuo zlatno pokriće dolara, to je dovelo do raspada Bretonvudskog sistema, dolar je otpočeo slobodno plivanje, ali je do danas zadržao poziciju ključne svetske rezervne valute. Svetska finansijska kriza iz 2008. godine podsetila je na manjkavosti sadašnjeg MMS-a, jer je kolebljiva vrednost dolara nametnula rizik držanja ove valute u deviznim rezervama centralnih banaka. Obnovljeni su prigovori zemalja sa najvećim deviznim rezervama na svetu o "neodmerenoj privilegiji" SAD u MMS-u, kako je to svojevremeno nazvao Šarl de Gol. Impulsi monetarne politike zemalja čije valute spadaju u klub vodećih svetskih valuta (pre svega SAD, evrozone i Japana) prenose se van granica ovih zemalja i utiču na ostale zemlje u globalizovanoj svetskoj privredi. Ovaj rad ima za cilj da ukaže na posledice sadašnje strukture MMS-a, koju karakteriše dominantna uloga dolara i evra u međunarodnim trgovinskim i finansijskim tokovima. Ispituju se kanali kroz koje se režimi monetarne politike SAD i evrozone prelivaju na međunarodno okruženje i posledice za ostale zemlje.

2015

Amidst calls for reform of international financial institutions and failure of existing development banks to satisfy the development financing needs of developing countries in general, and BRICS in particular, the BRICS leadership at their 5th Summit in Durban in March 2013 announced the establishment of a BRICS Development Bank. While details regarding the mandate, governance structure, etc. of the proposed bank are still being worked out, this report tries to propose a vision for a progressive BRICS Development Bank based on case studies of two regional development banks – the Asian Development Bank (ADB) and the Development Bank of Latin America (CAF) – as well as semi-structured expert interviews. What kinds of practices and norms can the New Development Bank seek to replicate and adapt from these two banks, and what should it be doing differently? A number of proposals have been put forth in this report. The concluding part points to some of the challenges that the BRICS wi...

AFRICAN EAST-ASIAN AFFAIRS, 2016

At the fifth BRICS summit in 2013, the BRICS countries (Brazil-Russia-India-China -South Africa) agreed to form new multi-lateral development financial institutions such as the New Development Bank and the Contingent Reserve Arrangement. These new institutions are intended to perform similar roles to that of previously established international development institutions, particularly the World Bank and the International Monetary Fund while avoiding their biases towards lending to developing nations. This paper examines the role that these institutions play in changing the international financial architecture of development finance, particularly infrastructure development in the BRICS countries for the purposes of stimulating further trade and investment opportunities. It argues that the New Development Bank and Contingent Reserve Arrangement faces many challenges, such as issues of governance structures and decision making procedures which require integrity, transparency and political immunity in making lending decisions. It will also examine the role of China as a key partner and major source of capital in these development projects and, as well as its interests in strengthening its political and economic ties with other developing countries.