The BRICS countries have signed a deal to create a new $100 billion development bank and emergency reserve fund.
Brazil, Russia, India, China and South Africa make the BRICS group.
The capital for the bank will be split equally among the five participating countries.
The bank will have a headquarters in Shanghai, China and the first president for the bank will come from India.
Brazil’s president Dilma Rouseff has announced the creation of the bank at this year’s BRICS summit meeting in Fortaleza, Brazil on Tuesday.
At first, the bank will start off with $50 billion in initial capital.
The emergency reserve fund – which was announced as a “Contingency Reserve Arrangement” – will also have $100 billion, and will help developing nations avoid “short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements”.
The creation of the BRICS bank will almost surely create competition for both the World Bank and other similar regional funds.
BRICS nations have criticized the World Bank and the International Monetary Fund (IMF) for not giving developing nations enough voting rights.
One of the goals for the BRICS bank – whose creation has been discussed for some time – would be to increase the amount of money loaned to developing countries to help with infrastructure projects.
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