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New Development Bank

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New Development Bank
AbbreviationNDB
Formation15 July 2014 (2014-07-15)
TypeInternational Financial Institution
Legal statusTreaty
HeadquartersShanghai, China
Membership
 Brazil
 Russia
 India
 China
 South Africa
AffiliationsBRICS

The New Development Bank (NDB), formerly referred to as the BRICS Development Bank[1], is a proposed multilateral development bank operated by the BRICS states (Brazil, Russia, India, China and South Africa) as an alternative to the existing World Bank and International Monetary Fund.[2] The Bank is setup to foster greater financial and development cooperation among the five emerging markets. It would be headquartered in Shanghai, China[3] and the first chief executive will come from India.[3]

History

The establishment of the bank was agreed to by BRICS leaders at the 5th BRICS summit held in Durban, South Africa on 27 March 2013.[2]

On 15 July 2014, the first day of the 6th BRICS summit held in Fortaleza, Brazil, the group of emerging economies signed the long-anticipated document to create the $100 billion BRICS Development Bank and a reserve currency pool worth over another $100 billion. [4] Both will counter the influence of Western-based lending institutions and the dollar. Documents on cooperation between BRICS export credit agencies and an agreement of cooperation on innovation were also signed.[5]

Shanghai was selected as the headquarters after competition from New Delhi and Johannesburg.

The first president will be from India,[6] the inaugural Chairman of the Board of directors will come from Brazil [7] and the inaugural chairman of the Board of Governors will be Russian.[7]

Objectives

Among the goals of the Bank is to provide funding for infrastructure projects and create a "Currency Reserve Arrangement" worth US$100 billion which will help member countries counteract future financial shocks.[8] The Bank would also provide assistance to other countries suffering from the economic volatility in the wake of the United States' exit from its expansionary monetary policy.[9]

This fund will consist of $10 billion of "paid-in capital" ($2 billion from each member to be provided over seven years) and an additional $40 billion to be "paid upon request".[10] Out of the total initial capital of $100 billion, China will contribute $41 billion, Brazil, Russia and India would give $18 billion each, and South Africa would contribute $5 billion.[11] 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[12]

See also

Notes and references

  1. ^ "BRICS Bank to be headquartered in Shanghai, India to hold presidency". Indiasnaps.com. 16 July 2014
  2. ^ a b Powell, Anita. "BRICS Leaders Optimistic About New Development Bank". Voice of America. Retrieved 27 March 2013.
  3. ^ a b Lewis, Jeffrey; Trevisani, Paulo. "Brics Agree to Base Development Bank in Shanghai". The Wall Street Journal. Retrieved 16 July 2014.
  4. ^ "Brics nations to create $100bn development bank". BBC.com. 15 July 2014
  5. ^ "BRICS establish $100bn bank and currency reserves to cut out Western dominance". RT.com. 15 July 2014
  6. ^ http://timesofindia.indiatimes.com/business/international-business/BRICS-Development-Bank-launched-first-president-to-be-from-India/articleshow/38440605.cms
  7. ^ a b "Brics Agree to Base Development Bank in Shanghai Bank to Finance Infrastructure Projects in Emerging-Market Countries". 15 July 2014. {{cite web}}: |first= missing |last= (help); line feed character in |title= at position 49 (help)
  8. ^ Smith, David (28 March 2013). "Brics eye infrastructure funding through new development bank". London: The Guardian. Retrieved 3 April 2013.
  9. ^ "BRICS bank to benefit developing countries: Brazilian president". IANS. news.biharprabha.com. Retrieved 15 July 2014.
  10. ^ "BRICS bank to be headquartered in Shanghai". en.itar-tass.co. ITAR-TASS. 10 July 2014. Retrieved 11 July 2014.
  11. ^ "BRICS Development bank top on Agenda of 6th BRICS Summit". IANS. news.biharprabha.com. Retrieved 15 July 2014.
  12. ^ http://mystudyroom.org/entries/current/new-development-bank-set-up-by-brics
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