Dominating institutions such as the World Bank and the International Monetary Fund (IMF) will now have to compete as the BRICS Bank opened its doors and officially commenced business this week. Earlier this month, the bank held its first meeting in Moscow with its board of governors.

The long awaited New Development Bank (NDB), or as we know it, BRICS Bank, will open with a $50 billion capital to invest in public infrastructure to compete where the US once had a massive stronghold. The $50 billion will be equally shared among the founding members, with another $50 billion authorized additionally.

The agreement was first signed this time last year on the 15th July, with its five bloc members encompassing Brazil, Russia, India, South Africa and China, with the board of governors led by appointed president Kundapur Vaman Kamath.

The meeting this month aimed to develop the first five-year development strategy, with an objective to “promote reform of global economic governance.” China’s Finance Minister Lou Jiwei has also said that “…the bank’s establishment will be an important achievement for financial cooperation among BRICS members.”

The three-tiered governance structure will oversee the workings of the organization, with a strict regulation body to ensure its operation – the Governing Council and the Standing Committee.

There will also be an African regional center of the bank based in Johannesburg, South Africa; and a prescribed $10 billion from the Chinese government for “initial subscribed capital.”

With the meetings well under way, it is undoubtedly a blow to the World Bank and IMF. The BRICS bank and its directors are serious about creating a second option to the world and reducing their reliance on the U.S.

The BRICS Contingent Reserve Arrangement (CRA) will take effect on the 30th of July, Head of the Russian Central Bank Elvira Nabiullina said.

The NDB is anticipated to launch late this year or early 2016.



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