Brics reach concensus on $100bn bank

Brics reach concensus on $100bn bank

2014-07-07 13:43

Beijing - The five Brics nations have reached a broad consensus on their $100bn development bank though some differences remain, a senior Chinese diplomat said on Monday ahead of a summit in Brazil next week to be attended by President Xi Jinping.

The new bank will symbolise the growing influence of emerging economies in the global financial architecture long dominated by the United States and Europe through the International Monetary Fund and the World Bank.

Leaders of Brazil, Russia, India, China and South Africa are expected to sign a treaty to launch the bank officially when they meet at a Brics summit in the northern Brazilian city of Fortaleza on July 15.

Negotiations to create the lender have dragged on for two years, with some members growing weary of China's desire to have a bigger stake in the bank by putting in more capital.

A senior Brazilian government official said in May the five Brics nations were likely to agree to fund the bank equally, giving them the same rights.

Briefing reporters ahead of the summit, Chinese Vice Foreign Minister Li Baodong would not be drawn on the specifics of the share structure, but was optimistic.

"On the Brics development bank, all parties have extensive consensus on this issue. Of course there are a few differences and different viewpoints on technical issues," Li said.

"We are fully confident that we can reach consensus and establish the Brics development bank at this meeting," he added.

"On this type of technical issue, Brics members must establish consensus through friendly consultation," Li said, referring to the bank shares issue. "There are all kinds of different considerations, but the goal is to establish the Brics bank as soon as possible."

The bank will have to be ratified by the countries' legislatures and could begin lending in two years, the Brazilian official told Reuters earlier.

The new development bank would help cover growing demand for project financing that has not been entirely met by global multilaterals, which, for years, have been heavily criticised for meddling in the domestic policies of sovereign borrowers.

The Brics also need to decide if the bank will be based in New Delhi, Shanghai, Johannesburg or Moscow. Brazil will not offer headquarters because of upcoming presidential elections that could delay negotiations, the Brazilian official said.

Xi will also visit Argentina, Venezuela and Cuba on his swing through the region, and at the Brics summit will have his first meeting with new Indian Prime Minister Narendra Modi, Li said.

But he will not attend the final of the World Cup, as Brazil had hoped.

"Based on (his) schedule he will not be able to appear at the World Cup final held in Brazil. This is unfortunate," Li added.

  • Wehr Wulf - 2014-07-07 14:02

    Why are we even in this group? We're going backwards and the others are booming relatively. South Korea should be the 'S' in the acronym.

      JimGordon - 2014-07-07 14:31

      Where exactly will SA get the money from? I doubt the other countries will accept Nkandla as collateral

      Malcolm Nicolson - 2014-07-07 15:34

      If there should be an African country, it should be Nigeria, they have grown and moved into the number 1 spot while we in SA are not growing, more involved with squabbling (government issues, strikes) and have declined. Very sad for my what is happening to SA.

  • stefan.strydom.902 - 2014-07-07 14:03

    And all the government with its troglodyte "intellectuals can see is an easy way to get their hands on more money. It is not as if ZA can contribute anything as our economy is in tatters!!

  • Ngqukuva Mthombo - 2014-07-07 14:07

    Brics is moving forward and wonder if SA is really ready about this move...*winx*....I just can't wait and love Brazil, Russia, India, China and South Africa! Let's do it!

  • Mike White - 2014-07-07 14:23

    Go SA! We must build the bank in Sandton! Make it the fin capital of the BRICS nations.

  • Sihle Dube - 2014-07-07 15:01

    Good for all for not allowing one country to dominate. Equal share for everyone, that way, the decision on the location of the bank will not be biased. I do hope for South Africa to get it though. The province is immaterial, as long as it is RSA.

      Malcolm Nicolson - 2014-07-07 15:29

      In reality, the country with the cash will dominate, that is just a fact of life. EU is an example, Germany has the economic power, they have the money, that gave them the right to point fingers and pull strings. Not that they are bullies, it is in their interest the EU is strong.

      Andre de Beer - 2014-07-07 15:49

      Regarding the funding of the bank equally...where will our government get R216 billion rand from, based on my calculation of an equal share of $20 billion each...

  • Victor Cover Mkhaliphi - 2014-07-07 15:57

    Equal contribution means RSA must come up with over R200 billion, the kind of money we don't have.

  • Louie Walshe - 2014-07-07 16:39

    We do not need the "money", we have the "gold" (PM's). This is one of many moves currently unfolding to break the USD reserve status. Soon everyone will witness the collapse of the American empire in dramatic style. Fiat currencies have a 100% collapse record and the east is driving toward a new currency system that will have asset and commodity backing, not DEBT as is the current system. Keep an eye on the war in Ukraine and the Middle East, these are major catalysts that are almost ready to explode and will usher in the end of the current global economic system.

  • Bastille French - 2014-07-07 18:04

    This development is a once in a lifetime type of thing. And history students will be studying this moment a one hundred years from now. A new birth for international system. This is wonderful news. Two hundred years from now, we will be looking back with joy at this event.

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