BRICS challenge IMF and make their own version

JulieW · Mar 27, 2013

More China, Russia, India gold imports in 2013 anyone?

http://rt.com/business/bank-rival-imf-world-852/

The 'big five' of the developing world will discuss creating their own global World Bank as their 5th annual summit kicks off Tuesday in sunny Durban.

The move is linked to the developing world's disillusionment with the status quo of world financial institutions. The World Bank and IMF continue to favor US and European presidents over BRICS nations, and in 2010, the US failed to ratify a 2010 agreement which would allow more IMF funds to be allocated to developing nations.

"Not long ago we discussed the formation of a developmental bank... Today we are ready to launch it," South African President Jacob Zuma said on Monday.

The 'big five'- Brazil, Russia, India, China, and its newest addition, South Africa, come together for the annual conference this year in Durban, South Africa in hopes of establishing a new development bank which will fund infrastructure and development projects in the five member states, and will pool foreign currencies to fend off any impending financial crisis.

"We will discuss ways to revive global growth and ensure macroeconomic stability, as well as mechanisms and measures to promote investment in infrastructure and sustainable development," Indian Prime Minister Manmohan Singh said on Monday, before heading to Durban.

The BRICS have called for a reconstruction of the World Bank and IMF, which were created in 1944, and want to put forth their own 'Bretton Woods' accord. And they are serious.

"Brics is not a talk show. It is a serious grouping," Zuma told reporters at the presidential guest house in Pretoria.

The new bank will cater to developing world interests and will symbolize a great economic and political union.

"There's a shift in power from the traditional to the emerging world. There is a lot of geo-political concern about this shift in the western world," Martyn Davies, chief executive officer of Johannesburg-based Frontier Advisory, told Bloomberg.

"A future BRICS Investment Bank is seen as a mechanism that would help realize where money should go, agree development strategies and coordinate investment," explained Georgy Toloraya, the executive director of Russia's national committee for BRICS studies to SA News.

In its nebulous stage, the new BRICS bank is unanimously supported by all five member states. In Durban, problems will arise on how to govern, fund, and operate the grand venture.

"When you set up a bank like this it's not just a question of opening the doors. There are some issues about where it is going to be located, what the capital contributions are going to be, the rules of deploying that investment. These are the sort of details that are in various stages of discussion and negotiation," said South African Trade Minister Rob Davies, in a statement.

The leaders may not reach a specific agreement in Durban this week, as each country has its own stipulations on its creation. Russia, for example, wants to cap each side's initial contribution to $10 billion, according to Mikhail Margelov, part of President Putin's team in South Africa.
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BRICS challenge IMF and make their own version

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BRICS challenge IMF and make their own version

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