By Yan Zhonghua, Zeng Dejin, Phoebe Ho
TORONTO, July 28 (Xinhua) -- A Canadian expert hailed the BRICS nations' recent decision to establish a development bank, saying the bank could potentially lead to some significant changes, including a shift toward a multipolar monetary system.
Domenico Lombardi, an expert on global economy from a Canadian think tank, told Xinhua in a recent interview that while the economic significance of the New Development Bank (NDB) was yet to be seen, many were debating the possible impact.
For the BRICS economies -- Brazil, Russia, India, China and South Africa -- the new bank has been a long time coming, said Lombardi, director of the Center for International Governance Innovation's global economy program.
According to him, a common frustration with the World Bank and the International Monetary Fund (IMF) led to the creation of the BRICS bank.
"This is just to highlight one of the main sources of frustrations for the BRICS economies and of course for China in the first place," he said, adding that this has "pushed the BRICS countries to come together to try to quash the political power, try to leverage on their rising economic power and provide a political leverage to their rising economic power."
"The BRICS development bank is noteworthy in that respect because it's really the first concrete initiative that comes out from the BRICS summit," Lombardi said.
The expert said that although the BRICS members had a very important role in today's world economy, they had been unable so far to galvanize their economic power into political clout.
"But now, with the creation of the bank, things are about to change for the emerging economies, which have now proved that they can create something together by converging their interests," he said.
As for China, Lombardi said it would be a perfect opportunity for it to diversify its pool of potential international investments, and BRICS and the NDB would be one part of a broader strategy in that regard.
Lombardi believes there would still be a lot to work out and it has yet to be seen how the BRICS countries will work together, but he said one thing the bank would certainly do is to apply pressure on the IMF to make necessary reforms.
He believes if the BRICS countries make the right moves, it may have the ability to shift the political power away from the United States and its allies and lead the world toward an increasingly multipolar international monetary system in the future.
Meanwhile, Lombardi stressed it was crucial that the regional financial architecture complements the global layers. "It'll be detrimental if the regional arrangements were established and managed in an openly antagonizing way."
"I think everybody will lose if, rather than negotiating and escalating pressure on the Bretton Woods institutions, one will go his own way establishing institutions that are alternative," Lombardi concluded.
"Because in the end, the stability of the financial system is a public good and the international community needs to have a stake in that, whatever happens in Europe is going to affect Asia and vice versa."