The largest emerging economies will push ahead with a $50-billion development bank to provide alternative funding for the Brics countries.
Brics countries reached an accord to push ahead with a $50-billion development bank by granting China its headquarters and India its first rotating presidency, according to a summit statement.
The leaders of Brazil, Russia, India, China and South Africa (known as Brics) also formalised the creation of a $100-billion currency exchange reserve, which member states can tap into case of balance of payment crises, the leaders of the five nations said at a meeting in Fortaleza, Brazil.
Both initiatives are designed to provide an alternative to financing from the International Monetary Fund and the World Bank, where Brics countries have been seeking more say. The measures coincide with a slowing of economic growth in the five countries to about 5.4% this year from 10.7% in 2007, according to a Bloomberg survey of economists.
Until the eve of the summit, India and South Africa had vied with China to host the headquarters of the bank. The administration of Indian Prime Minister Narendra Modi gave in after it was reminded that his country’s previous administration had already agreed to Shanghai as the bank’s headquarter, according to an Indian official, who requested not to be named because the talks were not public.
The Brics have evolved from the original term coined in 2001 by then-Goldman Sachs Group economist Jim O’Neill to describe the growing weight of the largest emerging markets in the global economy. In 2011, South Africa joined to give the Brics a broader geographic representation. – Bloomberg