BRICS Development Bank

[cobra commando]

BRICS to Create New
Development Bank in Brazil - Russia's Finance Minister

MOSCOW, July 9 (RIA Novosti) - The leaders of the BRICS countries – Brazil, Russia, India, China and South Africa – plan to sign an agreement to create the New Development Bank, with $100 billion in capital, during a summit in Brazil on July 14-16, Russia's Finance Minister Anton Siluanov told journalists. "There are no questions on the capital, three positions have been agreed upon: authorized stock of $ 100 billion, dedicated capital [from member-states] of $50 billion, and paid-up capital [which the countries are obliged to deposit within seven years] of $10 billion," Siluanov said, adding that the paid-up capital may be increased to $40 billion upon request. The proposal for the creation of the bank was first voiced at the BRICS summit it South Africa two years ago, but the participants failed to agree on the capital distribution. The capital is now planned to be equally distributed between member-states. "The bank is open to taking in new participants among United Nations members, but the agreement is that the BRICS share will not fall below 55 percent," Siluanov said. All major decisions at the bank are to be made through either a majority or two-thirds vote. The bank is expected to start operations next year and is to finance infrastructure projects in member-states. The bank's headquarters is to be decided upon at the summit in Brazil, where the leaders are to choose between Shanghai and New Delhi. The BRICS also plan to appoint the bank's chairman, who is to serve for the next five years. Russia has not submitted a candidate, Siluanov said, adding that the position requires a well- known person on the international market.
BRICS to Create New Development Bank in Brazil - Russia's Finance Minister | World | RIA Novosti

 

[pmaitra]

Delhi locked in tight race to house BRICS Bank HQ

Delhi locked in tight race to house BRICS Bank HQ

NEW DELHI: The national capital is engaged in a tight battle with Johannesburg and Shanghai to emerge as the headquarters of the proposed BRICS Bank with a decision on the multilateral body expected next week when leaders from the five countries, including Prime Minister Narendra Modi, meet in Brazil.

Leaders have to agree on several issues, including the equity structure and the focus of the development institution that has been in the works for four years. After much debate the issue of equity contribution has been sorted out with BRICS - Brazil, Russia, India, China and South Africa - chipping in with equal contribution of $10 billion each, with the authorized capital to be pegged at $100 billion. Earlier, South Africa was reluctant to be an equal partner and China was willing to help it out but that would have given Beijing additional say in the bank.

The other decision is related to the headquarters, where Moscow had also shown interest, but now the race has narrowed down to three capitals, a senior finance ministry official told TOI. Although Delhi is vying for the slot, Johannesburg's chances appear the brightest given that there are concerns over language barrier and freedom of expression in Shanghai. Johannesburg comes with the added advantage of being "centrally located".

Apart from the BRICS Bank, the leaders will discuss a Contingent Reserve Arrangement (CRA) that will provide a buffer to the five countries in times of a balance of payments problem. It will have an initial subscribed capital of US$ 100 billion, of which India, Brazil and Russia will chip in with $ 18 billion each. China is expected to contribute $41 billion, with the remaining $5 billion coming from South Africa.

Experts said focusing too much on locating the headquarters of the BRICS Bank in Delhi may not be a sensible idea for the government. "What you are going to get is 200-300 jobs for bureaucrats. Instead, India should focus on getting the presidency in the initial years so that it can guide the future of the institution," said a source who has worked on formulating India's strategy.

Another expert said China, South Africa and even Brazil would be more interested in seeing that the BRICS Bank, whose name is yet to be formalized, focused on lending more to Africa, while it made sense for India to get the institution to work in its neighbourhood.

In any case, China is keen on having the maximum say in the proposed development institution, modeled on the lines of the Asian Development Bank.

 

[pmaitra]

Re: Delhi locked in tight race to house BRICS Bank HQ

BRICS summit: Narendra Modi leaves for Brazil

Prime Minister Narendra Modi left New Delhi on Sunday to attend the five-nation BRICS summit in Brazil, his first multilateral summit meeting since taking over office May 26, where he would also meet for the first time with the other heads of the bloc which include Brazil, Russia, China and South Africa.

The Sixth BRICS Summit is being held in Fortaleza and Brasilia on July 15-16. The bloc of Brazil, Russia, India, China and South Africa accounts for 40 per cent of the global population and a combined GDP of $24 trillion.

The Prime Minister will also meet the heads of governments of South American countries, including Argentina, Bolivia and Venezuela, who have been invited by host Brazil.

In a pre-departure statement, Mr. Modi said he looks at the BRICS Summit as an opportunity to discuss with his BRICS partners "how we can contribute to international efforts to address regional crises, address security threats and restore a climate of peace and stability in the world".

[HR][/HR]

Hmmm, so it is going to be more than simple economics. What would economics be, without the safeguards?

 

[Free Karma]

Re: Delhi locked in tight race to house BRICS Bank HQ

Some Russian officials have let out noises that the bank will be hqed in Shanghai.

ITAR-TASS: Economy - BRICS bank to be headquartered in Shanghai
http://thebricspost.com/shanghai-to-host-brics-bank-putin-aide/

so with 2 of the big powers it will be quite tough to get it into Delhi.

 

[Free Karma]

Re: Delhi locked in tight race to house BRICS Bank HQ

Negotiations to launch new BRICS bank hit snag - source | Reuters

(Reuters) - On the eve of the signing of a deal to launch a joint development bank, the BRICS nations have still not agreed on where the lender will be headquartered, a senior official involved in the talks told Reuters late on Monday.

The leaders of the five emerging market economies are expected to sign a deal on Tuesday that creates the $100 billion bank and a reserves fund of the same size to challenge Western dominance over global finance.

The five nations are Brazil, China, India, Russia and South Africa.

Negotiations have stalled for now on a dispute between China, India and South Africa over who will host the bank. The disagreement has also delayed a decision on which of the countries will hold the first 5-year presidency of the bank.

"This should be easy to resolve but we have this dispute. If it doesn't move forward, we may have to leave the decision for another meeting," said the official, who declined to be named.

Another negotiator confirmed that no decision has been reached.

A delay could be an embarrassment for the BRICS, which see the creation of the bank as a major step to gain more influence in the shaping of the world's financial architecture.

The official said that if no deal was reached on Tuesday, the leaders could still sign off on creation of the bank and decide on the headquarters and its president at a later date.

Negotiations to create the bank dragged on for more than two years as Brazil and India fought China's attempts to get a bigger share in the lender than the others.

The stark economic and political differences between the BRICS countries has made it difficult for the group to turn rhetoric to concrete action in coordinating policies.

Russian and Indian officials have signaled that China's business hub, Shanghai, was the front-runner in the race to land the headquarters.

I'm guessing South Africa are holding it up, since the other 2 big guns India and Russia are okay with Shanghai . Perhaps SA feels like they are losing out and just making up the numbers, since they are providing the lowest (5 billion vs 50 from China and 15 each from the remaining members) and want some control, atleast in terms of location.

 

[Compersion]

Re: Delhi locked in tight race to house BRICS Bank HQ

Hope it does not become like the Asian Development Bank where certain countries dominate.

For the "development bank" it is equal contribution - USD 10 billion by all with authorized capital of 100 billion (that means issued capital can be raised at a later stage depending on requirements). It would have been fascinating if another currency was used - but whats the alternative. Is there provision for which currency the development loans will be made is another question - is there a option for the loanee.

The Contingent Reserve Arrangement is where there is difference in funding. I am not even sure it is scaled to the actual economy size of the countries hence the difference in funding and also future possible requirements. And who can use this CRA and on what terms. Because when a BOP happens it happens to many and not one.

Contingent Reserve Arrangement (CRA) that will provide a buffer to the five countries in times of a balance of payments problem. It will have an initial subscribed capital of US$ 100 billion, of which India, Brazil and Russia will chip in with $ 18 billion each. China is expected to contribute $41 billion, with the remaining $5 billion coming from South Africa.

I suppose there is a need for another Development bank away from World Bank and Asia Development Bank parameters. A alternative choice one can say.

 

[cobra commando]

BRICS Summit Clears Setting Up of $100 Billion New Development Bank - NDTV

 

[Max Mojito]

I really hope they are successful with this bank. India should make every effort so China doesn't control the whole thing.

 

[CCP]

 

[Free Karma]

BRICS: India gets Presidency, Shanghai the Bank | The Indian Express

After two days of hectic negotiations at the BRICS Summit India on Tuesday got the presidency of the BRICS New Development Bank. A senior government official involved in the talks said the bank will be headquartered in Shanghai.
China and Russia were in close coordination during the negotiations, after their recent multi-billion dollar gas deal.
"The BRICS Bank is an idea originally conceived by India. Every BRICS member is certain that such a bank is the need of the hour, particularly with the Bretton Woods institutions such as the World Bank and the IMF failing to give adequate representation to developing nations over the last many decades," said the official.

The four issues that were open for discussion on the BRICS Bank were its name, location, presidency and shareholding. The bank has been formally named BRICS New Development Bank.
South Africa, which was originally pitching for the presidency, withdrew its bid and backed India instead. South Africa sees in India an ally at the World Trade Organisation talks, particularly in areas of agriculture, concessions to LDCs and non-binding issues.

India has ensured that all countries have equal shareholding in the bank, with equal contribution to the capital.
"Equal shareholding is a fait accompli now. Nobody wants BRICS Bank to end up like the Bretton Woods institutions," said the official.
The project costs would be based on a formula depending on the economic weight of the member countries. "We have a large number of new big projects. We will gain," said an official.
The bank will be capitalised at $ 50 billion, with each country chipping in $ 10 billion over the next seven to eight years.
Under the earlier UPA government, India had agreed to China's demand for locating the bank's headquarters in Shanghai. "We fought hard for the presidency, and we got it," said the official.

 

[Meriv90]

I'm going to enjoy that power struggle, good luck(honest wishes,since of the 2tn $ for development needed we finance only 2-3% of the total) with the project, lets not mention the CDB, CAF, BNDES.....

The fact they have evaluated Argentina while not trying to get countries like Mexico or Indonesia/Phillipinnes, says everything, this will be just a "longa manus" for we already know who.

Even if there is just 10billion quota for each member you are pooling your credit rankings that means at the end who is paying more is China and they will make it weight in the future.

IMHO the fact they got the headquarters is a prove,

 

[pmaitra]

Even if there is just 10billion quota for each member you are pooling your credit rankings that means at the end who is paying more is China and they will make it weight in the future.

IMHO the fact they got the headquarters is a prove,

It is obvious the HQ would have been in PRC. They are reaping the benefits of all they did right since the last three decades. There was no way it was going to be in India.

 

[Compersion]

the location is not significant at this moment.

if one looks at the previous heads of world bank, adb, etc they were from the countries that had dominance in the bodies. For example ADB has had Japanese. One can also look at the locations where these are based (for example ADB is in Phillipines although Japan is dominant "shareholder").

this is the first time such a tradition is broken away from on such a multilateral development bank body and it is a Indian that will head it. that is historic and also the reason behind it is with a Indian footprint. It is on principle.

the reason for location is not based on dominance previously. but the reason for selecting the head is (traditionally). India is the first country to break that tradition.

but yes the location in Shanghai in the long-term will come into picture especially since PRC has its own development bank and probably will try and refer to that to "customers" when they approach Brics Bank. Also its good for Shanghai image and real-estate. Also PRC will leverage it for internal audience and obviously the people the manage the location will be from PRC mostly (administrative staff, etc). Its a good deal for PRC.

Further BRICS bank will have to have new members eventually and it seems they will promote it to be different to what world bank, adb are especially with the equity percentage being equal among all its members. I am sure there must be a condition to that extent and if that were to change there would need to be some type of agreement among others.

Lastly what BRICS bank will become and achieve will be down to the first few years of its existence (with a Indian Head).

 

[amoy]

Establishing BRICS Bank affords more means for developing countries to access capital and to pry open the closed international system. And competition for the World Bank will end up benefitting the debtors. However the bank shall avoid potential pitfalls as many who are let down by WB or IMF are not good "customers" at all.

Also many ways for Chinese to pursue self interest outside of this bank as money talks. China hints at purchase of Greek bonds

 

[Free Karma]

10 Important Points about the BRICS Bank - NDTV

1. The $100 billion development bank launched at the sixth BRICS - Brazil, Russia, India, China and South Africa - summit in Brazil is aimed at funding infrastructure projects in developing nations. The BRICS also set up a $100 billion currency reserves pool to help countries forestall short-term liquidity pressures.

2. The bank will be based in Shanghai, China. It was delayed because of tough negotiations over the location. India and South Africa too had their hats in the ring to host the bank.

3. India gets the first presidency for six years, followed by five-year terms for Brazil and Russia. China which as the world's number 2 economy has wanted a greater influence over the bank to expand its political clout abroad will not preside over it for the next two decades.

4. The bank will be called the New Development Bank, a name suggested by Prime Minister Narendra Modi.

5. The bank will begin with a subscribed capital of $50 billion divided equally between its five founders, with an initial total of $10 billion in cash put in over seven years and $40 billion in guarantees. China wanted a higher contribution pushing for economic strength of a member nation to be the criteria. But India and Brazil insisted on equal contribution.

6. "We pulled it off 10 minutes before the end of the game. We reached a balanced package that is satisfactory to all,"a Brazilian diplomat told Reuters. Negotiations were reached at the eleventh hour due to differences between India and China. The impasse reflected the trouble BRICS nations have had in reconciling stark economic and political differences that made it hard for the group to turn rhetoric into concrete action.

7. The long-awaited bank is the first major achievement of the BRICS countries since they got together in 2009 to press for a bigger say in the global financial order created by Western powers after World War II and centered on the International Monetary Fund and the World Bank.

8. The BRICS were prompted to seek coordinated action following an exodus of capital from emerging markets last year, triggered by the scaling back of US monetary stimulus. The new bank reflects the growing influence of the BRICS, which account for almost half the world's population and about one-fifth of global economic output.

9. The bank 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.

10. China, holder of the world's largest foreign exchange reserves, will contribute the bulk of the contingency currency pool, or $41 billion. Brazil, India and Russia will chip in $18 billion each and South Africa $5 billion. If a need arises, China will be eligible to ask for half of its contribution, South Africa for double and the remaining countries the amount they put in.

 

[Compersion]

In traditional sense the pakistan is a "bad" and "worthless" customer. But make no doubt that it will be one of the first to approach BRICS because of PRC presence. India ought to not shy away from that but make conditions of the loan appropriate and also link it to the foresight of opening up trade between India and Pakistan.

either way its good developments.

but more importantly i am more concern about the below news. i had a feeling something was not right when i saw modi and putin coldness after all the brics heads "put their hands together" and also when Modi went over to Xi purposely.

Modi flies into niggling air pockets

BRICS: Multiple gaffes ruin Modi's first big moment on world stage - Firstpost

"These things happen," said a retired Indian diplomat who has served in the foreign office's protocol division. "But rarely do you see four of what appear to be potential goof-ups on one trip."

its better to have these things come up early on in the administration term and make sure they do not happen again.

good trip ... for the long term

 

[right wing]

Brics bank and what does india get out of it

On 15th July,2014,even as 5 BRICS Leaders smiled and held hands in Brazil and announced the New Development Bank,a new IMF like body,concerns remain about its future as well as hopes of how it could forever change our world.
The need for this bank was first pointed out by a Delhi based think tank,n soon took concrete shape in 4th BRICS summit,New Delhi.
Prior to that,countries in the BRICS,especially PRC and Brazil,were crying for more reforms in the IMF and World Bank itself,two existing monetary fora,with full control of the Western world,born out of Woods conference in post world war scenario....These two institutions headquartered in USA,gives disproportionate control to Western countries in determining not only these institutions' functioning,but also wide control over world financial affairs.
The new BRICS bank,is the first step to redress that situation of unbalanced western hegemony.
BENEFITS FOR INDIA.....
1.A new bank to lend us loans at cheaper rates and easier clauses than WB,IMF...as it our bank...
2.Inaugural presidency of the bank has been wrested by us,(thanks to our gutsy NAMO),And if the president is given powers akin to World Bank president or IMF MD,then this is a game changer for India.Usually as head of executive body of the bank,president is the one who decides who gets the loan and under which conditions,he is the CEO of the bank.India as 5yr inaugural president means we get to decide whom to give loans n whom not,thus effectively halting chinese dreams of world domination.As president of the Bank,India gets to set the broad policy and direction of the bank in its formative years,which once set will be difficult to change in future....thus despite misplaced fears,for now BRICS BANK,will be a multilateral bank,without bending to nefarious Chinese or Russian interests,and only a strong indian presidency in the foundational decade can prevent it.
3.This new bank will also help us in selling our soft power,since India as president will control and co ordinate,albeit with other nations the policy of the bank,expect more leverage for Indian brand worldwide,for the first time a big international monetary body would have anI ndian president,presiding over its birth,nurturing and creating a truly multi.lateral fora unlike World Bank or IMF.
4.Again as a result of serious fightback negotiations by the PM,what we get is equal voting rights for all BRICS nations...which means while India wont single handedly control the bank,it wouldnt allow China or Russia to do so..As seen in the negotiation tables,India ,SA,Brazil all three were cooperating very closely,augurs well for us,if IBSA,stand strong together,we can easily stop Chinese designs,if and when they want on this bank.
4.The reserve corpus of 100$ billion,is perhaps the most vital and most understated achievement of this summit.It will ensure that our currencies,all of which suffer severe fluctuations,because of usa monetary policy changes,and FED RESERVE actions,now remain well protected against these deliberately induced external shocks...this in turn would boost investor and banking climate in all our nations.More over,this huge fund corpus can be extended to other developing countries currently outside the BRICS in the near future..Here too the role of the new Indian President will be closely watched.

POTENTIAL RISKS
1.Chinese hegemony:China has successfully wrested the headquarters of the bank to be based in Sanghai.This was however almost pre decided cause president Putin and PM Singh had already acceded to the Chinese request in Durban 2013.Indian officials say.Although the new Modi led regime,wanted New Delhi as head office,negotiations couldnt be taken beyond a point,because frankly India had already commited to Shanghai,an year back.
Ok,now the question in our mind is, if Shanghai was almost decided,why did the negotiations drag on so long,and according to one Brazilian diplomat ,came close to breakdown,until about 10 minutes prior to deadline,when issues were finally settled.
The answer lies in the fact that PRC,after knowing that it has already bagged the head office,wanted few more things in its pockets,and with russia willing to accomply,it dreamt of a bigger share in both the bank and the reserve corpus as well as presidency.
Not only are the Chinese tough negotiators,they want everything,probably fairly so,as they are more economically powerful than all of us combined.
. The Chinese know an equal power sharing formula,effectively,can isolate it in its own bank(as they feel about it).And this is likely to happen in near future,because Brazil,India,SA..coordinate closely with the US and have no morbid hatred for it unlike China...politically and economically,our world view(IBSA) and Chinese view are poles apart.
While we formed the bank because we want to rid ourselves of US power,n not simply give in to an even lesser power,the Chinese wanted the bank to be a symbol of their arrival on world stage...an international court like bank sucking upto its interests and allowing China to behave like USA in the the"new world bank"...the logic..i invest more,i control more,i decide more...and u support me,as i am main challenger to USA.
But due to tactical games played by India,which would do anything from Chinese dream to stop being fulfilled,especially knowing the fact that,while head office is a stone house,the real life of the bank is the CEO and the voting shares,scuttled Chinese moves at both the levels,and wrested the presidential post for itself,albeit with full brazilian and south african support,so as to forever set impartial policy steps,to protect the bank from even future Chinese monopoly....to those not understanding the significance of inaugural presidency...it is as important as being chairman of the constituent assembly and premier of a new born country....u basically will determine what the institution becomes...just like even today India is steeped in Nehruvian and Ahmedkar system of governance and law making...I can only shudder to think,what would happen if we got the head office and chinese got the presidentship...we would like have another JNU right in the heart of Delhi,now controlling monetary policy..instead what we have now is an oppurtunity to teach the Chinese some democratic etiquette on their soil...SOUTH AFRICA OR BRAZIL..wouldnt have managed this better as we would,because we know and are most concerned by hideous designs of the Chinese.
2.Internal rivalry and Chinese feeling of not getting enough...........
A sneek peak of the negotiations and the thought behind each negotiation shows how poorly united BRICS is..even while negotiating bank basics,we are trying to fight out each other...how will we unite and function??
If i were a Chinese,i wud feel tremendously dissapointed by what my country got out of this...
I contribute to over 50%of the group gdp,exports,reserves and even the corpus fund and in return i get only a stone house in my city,with countries like south africa 20th times smaller in gdp having equal share as me,and my next door bitch ,dictating bank norms and structure to me!!! what the chinese wanted was a body like IMF OR WB,what they get is bullshit of equal vote sharing with far junior countries..how is it better?..it might not have USA but pricks like INDIA ..or even brazil,both of whom will side with US led world order anyday.
With these less of its wishes fulfilled,will China seek a newer forum sooner than later,thus loosing interest here,and leading to slow demise of the body,even before it attains maturity...because China is the largest cog in this wheel..and is being denied its true space...so will it even stsy on here for long??or will its own proposed Asian Investment Bank..be its new focus ..its true World Bank...
..HOWEVER AS WE MAY DENY...none of other BRICS powers can face upto usa led lobby without chinese backing!!!
WHAT PROMPTS CHINA TO STAY ON IS OUR 3RD FLASH POINT...

3.Unified currency...the corpus aims to stabilise economies against dollar shocks and lower american influence...so are we planning to lower american influence by making a dollar based corpus..??americans will die laughing at this group..so in the longer term,a new currency will take over...here lies the great game!!!Chinese are known to be long term planners,seemingly we have contained them now,but say a decade down the line.. who will replace dollar..??
while right now rouble is the only freely convertible currency amongst BRICS states,rouble is a currency of a weaker country and has less acceptance,rupee is no where even in the picture...meanwhile yuan is the currency on the rise..already many countries r swapping yuan with china...one being its primordial enemy and second largest trade partner JAPAN...NOW THE Q IS WHETHER INDIA WOULD ALLOW FALLINF FROM THE LAP OF THE DOLLAR TO THE YUAN...say..15 years down the line...the answer is no...for now,we can work with rouble or dollar,but this currency issue,will return to bite us all,including china sooner than later...



So after weighing everything,including our diplomatic coups and relative misses,we get to the point,whether BRICS BANK would survive to lead the world??none of us can say now,but only hope..that we do like..germany and france have both taken leadership to make EU survive for this long!!!and it is where India and China hav to take lead,because it is our differences which can tear this group apart,and our resolving some of those differences,which can make it a third or rather the best counter to WB,IMF.

 

[amoy]

Re: Brics bank and what does india get out of it

Even when the Bank hardly takes off u've already started to envisage an internal rivalry - a IBSA-v-China+Russia scenario, or be worried abt "Chinese hegemony" or "hideous designs"?? What an omen! :thumb:

Here're some cold facts contrary to inflated Indian self appraisal
- India's GDP ranks No.4 only ahead of RSA, and the lowest per capita. Without $$$ how comes your prowess to hold IBSA together?
- RSA and Brazil look to China for investment, not india who's in need of it herself. Chinese GDP = B+R+I+S

On the wings of BRICS India for the 1st time arrives at the central stage. Otherwise she would continue as a nobody in West-dominated institutions IMF or WB given the economic might she possesses.

Yuan, with or without this BRICS platform, is bound to become the world's main reserve currency, while Rupees ...
Renminbi: Soon To Be A Reserve Currency? - Business Insider
Russia Returns Favor, Sees Chinese Yuan As World Reserve Currency | Zero Hedge

The earlier India makes peace with a lesser role the smoother the New Development Bank can sail ahead.

 

[Srinivas_K]

Re: Brics bank and what does india get out of it

The earlier India makes peace with a lesser role the smoother the New Development Bank can sail ahead.

This bank is just representing 5 countries, this is not an equivalent of ADB or IMF where every nation has the membership.

This Bank will fail ..... since chinese won't agree on the terms put by other members.

 

[nimo_cn]

Re: Brics bank and what does india get out of it

This bank is just representing 5 countries, this is not an equivalent of ADB or IMF where every nation has the membership.

This Bank will fail ..... since chinese won't agree on the terms put by other members.

it will fail mostly because India is unwilling to cooperate.

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