A new development bank is being progressed this week by the so-called BRICS countries, namely Brazil, Russia, India, China and also South Africa.
Russia’s President Putin is said to be hoping the bank will help reduce the West’s dominance of world financial institutions and also help Moscow shine by showing it is not isolated.
A two-day summit is in progress where a $100-billion reserve pool will be agreed, while an initial $50 billion in capital will go to the New Development Bank. Both are central to their efforts to reshape the Western-dominated financial system.
The contingency reserve pool is expected to start operating immediately to help members if they are hit by a sudden exodus of foreign capital.
The BRICS nations account for 20% of global economic output and 40% of world population.
Russia has increasingly been looking to emerging economics, particularly in Asia, after sanctions were imposed by the West over its part in the Ukraine crisis and after it was suspended from the Group of Eight industrial powers after it seized Crimea.
The idea of a new development bank was first proposed in 2012, but it was just last week that China ratified the bank. It is not expected to be in operation until 2016.
Other emerging markets such as Turkey, Mexico, Indonesia and Nigeria could join as partners at a later date.
Russian Foreign Minister Sergei Lavrov praised the BRICS nations, saying they have become an influential factor in world politics playing an “important stabilising role” in international affairs.
