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Commentary: BRICS development bank meets the call for fairer global financial order

English.news.cn   2014-07-16 16:07:09

Chinese PresidentXi Jinping (2nd R) poses for a group photo with Russian PresidentVladimir Putin (1st L), Indian Prime Minister Narendra Modi (2ndL), Brazilian President Dilma Rousseff (C), and South AfricanPresident Jacob Zuma during the sixth BRICS summit in Fortaleza,Brazil, July 15, 2014. (Xinhua/Lan Hongguang)

by Xinhua Writer Hu Yao

BEIJING, July 16 (Xinhua) -- Developing countries' long-held dream of forming a bank finally came true this week as the emerging-market bloc BRICS announced Tuesday the establishment of a development bank and a contingent reserve arrangement (CRA) at their sixth summit in the Brazilian city of Fortaleza.

The bank, created by five members of the BRICS -- Brazil, Russia, India, China and South Africa -- is aimed at "mobilizing resources for infrastructure and sustainable development projects in BRICS and other emerging and developing economies," as it is manifested by the Fortaleza Declaration.

The exhilarating outcome is due to the joint efforts from BRICS members to deepen their economic cooperation and tap their potential by innovative means and methods.

It dispels any doubts about member countries' determination to form such a bank, and shores up investors' trust in the capacities of the emerging economies.

Indeed, though faced with such challenges as slower economic growth, increase of inflation, capital outflow and currency depreciation due to the impact of the global economic crisis and decreased exports to developed countries, the emerging economies are determined to deal with any ups and downs by expanding cooperation in more fields.

On the other hand, emerging economies have a urge to boost innovative capacities and competitiveness in the global market by reforming their economic structures and imbalanced development models.

The BRICS development bank and the CRA are expected to help the BRICS countries tap their market potential and diversify exports, and offers more options for them when developing their economies while avoiding risks.

The two mechanisms will also serve as useful subsidies to the World Bank and the the International Monetary Fund (IMF), so as to strengthen the international financial system, making it a more balanced and just one.

The bank, to be headquartered in Shanghai, will have an initial authorized capital of 100 billion U.S. dollars, and its initial subscribed capital of 50 billion dollars will be equally shared among founding members.

The shared portion means each member country shoulders equal responsibility and their cooperation is based on an equal footing from the start.

The bank also eyes the less developed countries in Africa, with an African regional center of the bank setting up in South Africa.

The bank is expected to facilitate trade, enhance financial ties, tackle tax-related challenges and tap the cooperation potential in more fields.

Related:

Xinhua Insight: BRICS bank boosts Shanghai's profile, vies for more clout

SHANGHAI, July 17 (Xinhua) -- The BRICS's answer to an emerging market infrastructure funding facility became a reality this week, with the announcement that a development bank would be established and headquartered in Shanghai.

The bank has the potential of gaining greater sway in global finance that matches with the bloc's growing economic might. Full story

China Voice: BRICS bank diversifies global finances, not zero-sum game

BEIJING, July 16 (Xinhua) -- The plans of the emerging-market bloc of BRICS to establish a development bank usher in a long-awaited and helpful alternative to the Western-dominated institutes in global finance. Full story

BRICS to establish development bank, reserve arrangement

FORTALEZA, Brazil, July 15 (Xinhua) -- The emerging-market bloc of BRICS on Tuesday announced plans to establish a development bank and a contingent reserve arrangement (CRA).  Full story

 

Editor: Tang Danlu
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