The Diplomat.
The BRICS (Brazil, Russia, India, China and South Africa) bloc
has begun planning its own development bank and a new bailout fund
which would be created by pooling together an estimated $240 billion in
foreign exchange reserves, according to diplomatic sources. To get a
sense of how significant the proposed fund would be, the fund would be
larger than the combined Gross Domestic Product (GDP) of about 150
countries, according to Russia and India Report.
Many believe the BRICS countries are interested in creating these
institutions because they are increasingly dissatisfied by Western
dominated institutions like the World Bank and the International
Monetary Fund (IMF). For example, although the European debt crisis has allowed
BRICS countries to push for more influence at the IMF, they currently
only hold about a combined 11% of the Fund’s voting shares. By way of
comparison, the U.S. holds a 16.75% voting share, allowing it to veto
any major decision, which require an 85% supermajority, while the United
Kingdom and France both have larger voting shares than any of the BRIC
countries singularly.
The new institutions were first discussed in March during the 4th BRICS
summit in New Delhi. A subsequent special working group was set up by
the BRICS in June to hash out the details. If all goes to plan, the
proposed development bank and bailout mechanism will be formally
established at the 5th BRICS summit in Durban, South Africa in March 2013.
