The setting up of the development bank and reserve currency poll suggests that BRICS has come to stay.
A new dawn has opened in the international financial system with the birth of the Brazil, India, China, South Africa, BRICS development bank and joint foreign exchange reserve pool on July 15, 2014. The announcement, which was made in Fortaleza, Brazil, at the sixth summit of leaders of the bloc, is testimony of how far BRICS has evolved since creation in 2009.
Early Beginning
Foreign Ministers of Brazil, China, India, and Russia, began to meet sporadically, first convening in 2006 during the 61st UN General Assembly in New York. These initial talks explored ways in which these countries could cooperate politically. The first Heads of State BRIC summit held in June 2009 in Yekaterinburg, Russia. South Africa joined in 2010, changing the abbreviation from BRIC to BRICS. At the 2012 fourth summit in New Delhi, India, leaders called for expanded voting rights at the International Monetary Fund, IMF. The delegates also began to consider an alternative BRICS-led bank.
BRICS Evolution
The BRICS model has evolved from investment to a formalised network hoping to capitalise on the group’s collective promise in the wake of instability in the global economy. It has taken on a greater geopolitical role, with aims to enact institutional reforms that shift global power. While initial discussions focused on the need to reform international institutions, including the IMF and the UN Security Council, recent developments centre on creating a new institutional body. At the BRICS presidential summit in South Africa in March 2013, delegates agreed to establish a BRICS development bank to serve as an alternative to the World Bank.
BRICS Bank
Located in Shanghai, the BRICS Bank with 100 billion US Dollars in capital (about FCFA 48,477 billion) will fund infrastructure and sustainable development projects in both BRICS countries and developing markets. The first bank president will hail from India, and the presidency will rotate. The Chair of the Board of Governors will be Russian. South Africa will be home to the bank’s first regional centre for Africa.
BRICS leaders at their summit in Brazil last week instructed their Finance Ministers to work on organising the bank’s operations. Slated to open in 2016, bank membership will be open to other countries, though BRICS capital share cannot fall below 55 percent. Each country will send either their Finance Minister or Central Bank Governor to the bank's representative board. Future members could include countries in other emerging markets blocs such as Mexico, Indonesia and Argentina. Leaders also set up a Joint Foreign Exchange Reserve Pool known as the Contingent Reserve Arrangement.
Contingency Pool
Similar to the International Monetary Fund, IMF and with the same capital as the BRICS Bank, the institution will act as an emergency option for member nations with balance-of-payments troubles. Much of the fund will be provided by China, which will contribute 41 billion Dollars. Brazil, India, and Russia, will each contribute 18 billion Dollars, while South Africa will contribute 5 billion Dollars.
BRICS Business Council
During the 2013 summit, leaders set up the BRICS Business Council, made up of five entrepreneurs from each country to discuss ways to expand cooperation. The Council has a rotating chair between the five countries.
Ministerial Meetings/Forums
Foreign Ministers of BRICS have been meeting regularly in New York on the sidelines of United Nations General Assembly since September 2006. On the other hand, Economy/Finance Ministers have been meeting regularly on the sidelines of G20 meetings and IMF/World Bank annual meetings. Agriculture, Trade and Health Ministers also meet regularly to discuss issues concerning them.
Different Forms Of Cooperation
Russia hosted a formal meeting of BRIC National Security Advisers, NSAs in May 2009 to discuss the security implications of the global financial and economic crisis. The second meeting of BRICS NSAs was held in Brasilia in April 2010, followed by the third in Sochi, Russia in October 2010. Similarly, officials from member States cooperate in Science and Technology matters, organise competition conferences, business forums, joint study missions, city, academic and statistical exchange events.
