BRICS Bank Targets Developing Countries
By Emmanuel KENDEMEH, Cameroon Tribune
The new international institution will begin with an initial capital of 100 billion U.S. Dollars.
Brazil, Russia, India, China and South Africa that have formed an economic block called BRICS, on Tuesday, July 21, 2015 launched their bank called the New Development Bank (NDB) with headquarters in Shanghai, China. The international financial institution’s first set of loans
will be disbursed by April 2016. The initiators of the new financial institution say it will be an alternative and not a rival to the long-existing Western Bretton Woods institutions such the World Bank and the International Monetary Fund (IMF).
The New Development Bank (NDB) offers many advantages to its clients for its President Kundapur Vaman Kamath said, “Our objective is not to challenge the existing system as it is but to improve and complement the system in our own way," Financial Times reports. The key innovation the bank offers is that, “This bank will place greater emphasis on the needs of developing countries, have greater respect for developing countries’ national situation, and more fully embody the values of developing countries,” Financial Times quoted China’s Finance Minister, Lou Jiwei as saying and who added that, “Development is a dynamic process. There’s really no such thing as so-called ‘best practices’.”
Borrowing countries will not have to be submitted to the hitherto best practices imposed by the Bretton Woods institution in order to qualify for loans as the initiators of the new bank pledge to move the bank “from best practices to next practices”, its President Kamath is quoted as saying. He said that with current existing financial institutions, traditional development lending was often “too rigid, inflexible and slow. From a borrowing country’s perspective, these become huge deterrents to growth,” he reportedly said.
The New Development Bank presents advantages that are simply traits which offset the shortcomings of the World Bank and International Monetary Fund. Quora cited the presentation of Saurabh Modi of the Delhi University who talked on the advantages. One of the key traits is equality as all the five members of BRICS have agreed for an equal equality share in the bank. The power sharing model is equal and no country is in a dominating position and hence cannot dictate its wishes or execute its vested interests unlike in the IMF and World Bank. With regards to leverage, the BRICS nations now have a very easy source to look upon for any financial help.
One of the most utilitarian features of the Bank would be the Currency reserve pool available with it. BRICS members and those who would seek funding from the NDB to increase their infrastructure base, will not need to go to the Bretton Woods institutions with a begging bowl. This is because with the equity among the BRICS nations it will be easier to raise loans to boost infrastructure projects for their progress, welfare and emerging economies.
Some analysts say the BRICS bank appears to be sustainable monetary institution that matches the supply and demand dynamics of global finance very efficiently. Countries like China with large surplus budgets and enormous pools of money for lending with the NDB can easily send the money straight to the developing nations instead of passing through mediators at the IMF. Saving glut would also see equity in distribution in terms of loans contrary to a polarization in flow to only developed economies like US.
The new international institution will begin with an initial capital of 100 billion U.S. Dollars.Brazil, Russia, India, China and South Africa that have formed an economic block called BRICS, on Tuesday, July 21, 2015 launched their bank called the New Development Bank (NDB) with headquarters in Shanghai, China. The international financial institution’s first set of loans
will be disbursed by April 2016. The initiators of the new financial institution say it will be an alternative and not a rival to the long-existing Western Bretton Woods institutions such the World Bank and the International Monetary Fund (IMF).
The New Development Bank (NDB) offers many advantages to its clients for its President Kundapur Vaman Kamath said, “Our objective is not to challenge the existing system as it is but to improve and complement the system in our own way," Financial Times reports. The key innovation the bank offers is that, “This bank will place greater emphasis on the needs of developing countries, have greater respect for developing countries’ national situation, and more fully embody the values of developing countries,” Financial Times quoted China’s Finance Minister, Lou Jiwei as saying and who added that, “Development is a dynamic process. There’s really no such thing as so-called ‘best practices’.”
Borrowing countries will not have to be submitted to the hitherto best practices imposed by the Bretton Woods institution in order to qualify for loans as the initiators of the new bank pledge to move the bank “from best practices to next practices”, its President Kamath is quoted as saying. He said that with current existing financial institutions, traditional development lending was often “too rigid, inflexible and slow. From a borrowing country’s perspective, these become huge deterrents to growth,” he reportedly said.
The New Development Bank presents advantages that are simply traits which offset the shortcomings of the World Bank and International Monetary Fund. Quora cited the presentation of Saurabh Modi of the Delhi University who talked on the advantages. One of the key traits is equality as all the five members of BRICS have agreed for an equal equality share in the bank. The power sharing model is equal and no country is in a dominating position and hence cannot dictate its wishes or execute its vested interests unlike in the IMF and World Bank. With regards to leverage, the BRICS nations now have a very easy source to look upon for any financial help.
One of the most utilitarian features of the Bank would be the Currency reserve pool available with it. BRICS members and those who would seek funding from the NDB to increase their infrastructure base, will not need to go to the Bretton Woods institutions with a begging bowl. This is because with the equity among the BRICS nations it will be easier to raise loans to boost infrastructure projects for their progress, welfare and emerging economies.
Some analysts say the BRICS bank appears to be sustainable monetary institution that matches the supply and demand dynamics of global finance very efficiently. Countries like China with large surplus budgets and enormous pools of money for lending with the NDB can easily send the money straight to the developing nations instead of passing through mediators at the IMF. Saving glut would also see equity in distribution in terms of loans contrary to a polarization in flow to only developed economies like US.
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