Excellent News - BRICS set up bank to counter Western hold on global finances

[malaise]

http://in.reuters.com/article/2014/07/15/brics-summit-bank-idINKBN0FK08620140715
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(Reuters) - Leaders of the BRICS emerging market nations launched a $100 billion development bank and a currency reserve pool on Tuesday in their first concrete step toward reshaping the Western-dominated international financial system.

The bank aimed at funding infrastructure projects in developing nations will be based in Shanghai and India will preside over its operations for the first five years, followed by Brazil and then Russia, leaders of the five-country group announced at a summit.

They also set up a $100 billion currency reserves pool to help countries forestall short-term liquidity pressures.

The long-awaited bank is the first major achievement of the BRICS countries - Brazil, Russia, India, China and South Africa - since they got together in 2009 to press for a bigger say in the global financial order created by Western powers after World War Two and centered on the International Monetary Fund and the World Bank.

The BRICS were prompted to seek coordinated action following an exodus of capital from emerging markets last year, triggered by the scaling back of U.S. monetary stimulus. The new bank reflects the growing influence of the BRICS, which account for almost half the world's population and about one-fifth of global economic output. The bank will begin with a subscribed capital of $50 billion divided equally between its five founders, with an initial total of $10 billion in cash put in over seven years and $40 billion in guarantees. It is scheduled to start lending in 2016 and be open to membership by other countries, but the capital share of the BRICS cannot drop below 55 percent.
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This is great news.

[xchrom]

1. du rec.

[proverbialwisdom]

2. Missed this. What a week. (nt)

[malaise]

4. What a week

Yes indeed - what a week.

[octoberlib]

3. This is smart. Good for them!

I wish we could set up a bank to counter western hold on finances.

[proverbialwisdom]

5. The Real News Network: Is the New BRICS Bank a Challenge to US Global Financial Power?

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=12123

Is the New BRICS Bank a Challenge to US Global Financial Power?

Michael Hudson and Leo Panitch discuss and debate the significance of the new international development bank created by Brazil, Russia, India, China and South Africa

July 18, 2014

VIDEO AND TRANSCRIPT

PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore.

Will a new international bank challenge American global financial hegemony? Well, at recent meetings in Brazil, the five BRICS countries--that's Brazil, Russia, India, China, and South Africa--have created a new international bank called the NDB or New Development Bank, and it's been given $50 billion in initial capital. The BRICS bank works on an equal-share voting basis, with each of the five signatories contributing $10 billion. The capital base is used to finance infrastructure and, quote, sustainable development projects in BRICS countries initially, but other low- and middle-income countries will be able to buy in and apply for funding.

BRICS countries have also created a $100 billion contingency reserve arrangement (CRA), meant to provide additional liquidity protection to member countries during balance-of-payments problems and other financial shocks. The CRA, unlike the pool of contributing capital to the BRICS bank, which is equally shared, is being funded 41 percent by China, 18 percent by Brazil, India, and Russia, and 5 percent from South Africa.

The new bank is being described as a challenge to the IMF and the World Bank, that is, a challenge to American global financial power. But is it, as Vijay Prashad wrote, neoliberalism with southern characteristics?

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