BRICS agree to capitalize development bank at $100bn

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BRICS agree to capitalize development bank at $100bn

Posted By: igots2no
Date: Friday, 6-Sep-2013 11:01:22

The BRICS nations have decided to fund their development bank with $100 billion. The reserves are aimed at financing joint development ventures, and are set to rival the dominance of the World Bank and the IMF. “At the final stage of realization - the initiative to create a BRICS forex reserve pool – the size of its capital has been agreed at $100 billion,” Russian President Vladimir Putin said while opening the G20 Summit in St. Petersburg. Russia, Brazil and India will contribute $18 billion to the BRICS currency reserve pool, while China $41 billion and South Africa $5 billion, according to a press release issued by the BRICS on Thursday. Earlier this week Russia’s Finance Minister Sergei Storchak said that there were still a lot of “difficult details” to sort out. “These are systematic themes, complicated [and] negotiationsare difficult. We must assume the bank will not start functioning as fast as one could imagine. It will take months, maybe a year,” said Storchak. In June Storchak said the project would be up and running by 2015. The scheme was approved in Durban South Africa at the BRICS summit in 2013. The bank is designed to help finance infrastructure and development projects in the BRICS countries and will pool foreign currencies to fend off any future financial crisis. Russian Foreign Minister Sergei Lavrov said the bank will “help avoid the negative impacts that fluctuations in currency markets may have on our economies.” The creation of the reserves pool may help the BRICS nations in their drive to reform votes and quotas in the International Monetary Fund (IMF). An IMF quota represents a countries contribution to the fund’s capital as well as its clout in the IMF’s decision making. It can also decide the size of any loan that country receives from the IMF. Currently the US has the highest quota of any country at 17.08%, allowing it to veto any decision as any initiative is only passed if it receives 85% of the vote. The BRICS countries represent a considerable force in terms of the world’s finances. Trade within the group amounted to 16.8% of global commerce at $6.1 billion. http://rt.com/business/russia-brics-bank-g20-468/