BRICS countries establish their own development bank and currency fund

The BRICS countries Brazil, Russia, India, China and South Africa have established their own development bank. The agreement was signed on Tuesday, the first day of the BRICS summit in Fortaleza / Brazil.

The five major emerging economies will also establish a fund of gold and currency reserves for mutual assistance if necessary in a crisis situation. The BRICS currency fund is similar to the International Monetary Fund and can replace it in the future, as the news service Voice of Russia writes.

The new development bank is not limited to BRICS member countries, but is also open to other member states of the United Nations. The share of BRICS countries’ capital of the bank shall not be less than 55 percent. The bank’s main task is to finance infrastructure projects in BRICS countries and to increase mutual co-operation, trade and investment.

The development bank has its headquarters in Shanghai, the presidency will be the duty of India in the first step.

Regarding the currency fund, the five BRICS countries want to make themselves more independent of the decisions of the U.S. Federal Reserve System and the European Central Bank.

The German news magazine SPIEGEL Online quotes a Brazilian diplomat said that the new financial institutions should not compete with the existing ones, but shall supplement them.

The five BRICS countries have a unique position in the global economy. They form together the world’s largest market with 40 percent of the world’s total population. The countries have gigantic natural resources, an existing industrial infrastructure and they account for nearly 30 percent of the world`s GDP.

Source: Voice of Russia, SPIEGEL Online. Photo: Press Department of the Russian President