The group of fast-growing emerging markets known as the BRICS–Brazil, Russia, India, China, and South Africa–held their fourth annual summit this past week in New Delhi. The leaders of the five nations agreed on new measures to facilitate greater trade within the bloc, including a deal to extend credit facilities in the local currencies of other BRICS countries. They also discussed a potential plan to set up a joint BRICS development bank, which would serve as a counterweight to the Western-dominated World Bank and International Monetary Fund. However, the BRICS have not set out a comprehensive long-term agenda because they are hobbled by internal differences and have “nothing in common,” argues the Financial Times’ Martin Wolf.
What are the prospects for a BRICS development bank?
It’s not completely obvious to me what it could achieve, given that we have the World Bank and a whole network of big regional development banks. There are big questions about the governance of those institutions, and in particular, the continued domination of the developed countries. The BRICS collectively would be able to shake that if they really try to do so. What’s not clear to me is whether this is a bank that would operate everywhere using BRICS money in some way, or whether it would be a BRIC bank. We have enough official banks, and it would make far more sense to improve the governance of what we have than to start creating completely new institutions.
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