Brics leaders agree on bank formation

The agreement by the leaders of
Brazil, Russia, India, China and South Africa follows a meeting on the occasion of the Fifth Brics Summit on in eThekwini, South Africa.

They are of the view that the establishment of the Contingent Reserve Arrangement with an initial size of US$100 billion is “feasible and desirable”, subject to internal legal frameworks and appropriate safeguards.
In a joint statement the Brics leaders said they considered that developing countries faced challenges of infrastructure development due to insufficient long-term financing and foreign direct investment, especially investment in capital stock.

“We direct our finance ministers and central bank governors to continue working towards its (bank’s) establishment,” joint statement by Brics leaders read.
The initial capital contribution to the bank should be substantial and sufficient for the bank to be effective in financing infrastructure, the statement read.

In March 2012, Brics directed its finance ministers to examine the feasibility and
viability of setting up a new development bank.

Its aim will be to mobilise resources for infrastructure and sustainable development projects in Brics and other emerging economies and developing countries, to supplement the existing efforts of multilateral and regional financial institutions for global growth and development.

In June, in Los Cabos, finance ministers and central bank governors were tasked to explore the construction of a financial safety net through the creation of a CRA among member countries. — CAJ News.