The Creation of the BRICS Bank
By admin July 9, 2014


From left, Brazil’s President Dilma Rousseff gestures to India’s Prime Minister Manmohan Singh, Russia’s President Vladimir Putin, China’s President Xi Jinping and South African President Jacob Zuma as they gather for a group photo after a BRICS leaders’ meeting at the G-20 Summit in St. Petersburg, Russia, Thursday, Sept. 5, 2013 [AP] From

The BRICS refers to five major emerging national economies: Brazil, Russia, India, China, and South Africa. The group was originally known as “BRIC” before the inclusion of South Africa in 2010 at the invitation of China. The term “BRIC” was coined by the chief economist for Goldman Sachs, Jim O’Neill, in his publication, Building Better Global Economic BRICs in 2001.


According to a release from the Chinese Embassy, the five countries represent almost three billion people, with a combined nominal GDP of $16.039 trillion USD and an estimated $4 trillion USD in combined foreign reserves. However, despite their economic might, as developing countries they have limited voices in multilateral institutions such as the World Bank and International Monetary Fund (IMF).


Developing nations have long complained that Western nations have too much power in the management of financial international institutions. Therefore, as a response, the five countries will negotiate about The BRICS Bank in the 6th BRICS Summit in Brazil next week. The five countries share the intent to create a $100 billion fund to provide member countries with an emergency cushion of cash during crises, and also to reduce the reliance of emerging economics on the World Bank and IMF.


However, the negotiation has dragged on over the years. China is willing to contribute more than its share, but others are wary of China having a bigger stake in the Banks’s affairs. Whether the BRICS Bank would be established over the next one or two years depends on the outcome of the three-day meeting next week. But with an extensive consensus on the necessity of the BRICS Bank, it is likely that the different viewpoints would be ironed out.


The 1st BRIC Summit was held in Russia in 2009 with the respective leaders of the original four countries attending the meeting. Since then, the Summit was held once per year in the member countries. South Africa was the host in 2013 after joining the group. And the 7th Summit will be held in Russia again.


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