BRICS countries establish alternate funds to rival the IMF

Emerging BRICS powerhouse agrees to establish US$50B bank, US$100B crisis fund

JULY 17, 2014 | BY  |  Fortaleza, Brazil – The BRICS group of emerging powers met on Wednesday with South American presidents as they justified the creation of a development bank, seen as an alternative to Western-dominated global financial organizations.

The leaders of Brazil, Russia, India, China and South Africa (BRICS) held closed-door talks in Brasilia with counterparts from Argentina, Chile, Colombia, Ecuador, Venezuela and other Latin American nations.

President Donald Ramotar (3rd back) with leaders who attended the meetings in Brazil.

President Donald Ramotar (3rd back) with leaders who attended the meetings in Brazil.

The gathering follows a BRICS-only summit Monday in the seaside city of Fortaleza, where the five nations agreed to create the $50 billion bank for infrastructure projects and a $100 billion crisis reserve fund described as a “mini-IMF.”

Brazilian President Dilma Rousseff insisted that the BRICS were not seeking to distance themselves from the Washington-based International Monetary Fund.
“On the contrary, we wish to democratize it and make it as representative as possible,” she told reporters following talks with Indian Prime Minister Narendra Modi before joining other leaders.

Emerging and developing nations have been frustrated at the slow pace of IMF reform aimed at giving them bigger voting rights within the institution.
While the BRICS bank and fund will benefit the group for now, Rousseff has left open the possibility of using them to aid other developing nations, notably debt-ridden Argentina.
Argentina is at risk of defaulting on $1.3 billion in debts after losing a US Supreme Court battle with hedge funds seen as “vultures” by Buenos Aires.

“We need development banks that act as tools to finance infrastructure works and increase competitiveness, unlike development banks with the extortionist tools of developed nations,” Argentina’s cabinet chief Jorge Capitanich said before President Cristina Kirchner traveled to Brazil.

It could take two years, however, for the institutions to be operational because they have to be ratified by the legislatures of each BRICS nation, Brazilian officials say.
Chinese media hailed the creation of the BRICS bank, which will be based in Shanghai, blaming the West for flaws in the global financial system.

“The plans of the emerging-market bloc of BRICS to establish a development bank usher in a long-awaited and helpful alternative to the Western-dominated institutes in global finance,” China’s official Xinhua news agency said in an editorial.

After Wednesday’s talks, Chinese President Xi Jinping will spend one more day in Brazil to launch a China-Latin America forum with leftist leader, including Cuban President Raul Castro.
The meetings represent a new push by Beijing to gain clout in a region traditionally seen as a US backyard.

China’s massive purchases of commodities and exports of manufactured goods to the resource-rich region have boosted its two-way trade with Latin America to a total of $261.6 billion last year.

The meetings are also another opportunity for India’s Modi to present himself to the world.
For Russian President Vladimir Putin, the talks give him a platform following his country’s exclusion from the G8 group of industrialized nations over Moscow’s annexation of Crimea from Ukraine.

The BRICS leaders were joined by South American presidents including Chile’s Michelle Bachelet, Venezuela’s Nicolas Maduro, Colombia’s Juan Manuel Santos and Ecuador’s Rafael Correa. (

Also  read:

CARIBBEAN VIEW: The New Bank of BRICS: What’s in it for Small Economies?

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  • Albert  On July 17, 2014 at 2:34 pm

    Hope its not a case of giving up on one capitalist master, the west, for another in the making, China. Mainly raw material producers exchanging their products for Chinese manufactured goods. Wonder which country, apart from China, is going to provide funds, if not US vulture banks.

  • Clyde Duncan  On July 18, 2014 at 8:54 am

    BRICS: Brazil-Russia-India-China-South Africa will be the eventual replacement. BRICS Development Bank will provide alternative funding.

  • Clyde Duncan  On July 19, 2014 at 11:34 am

    I have been reading again – what did they say about little knowledge: Someone said that the fatal flaw in the BRICS Development Bank is that their funding is denominated in US-dollars. Okay! I suppose they could change that? [2] Someone else said that good ole USA is bankrolling the UN; the IMF and World Bank; so if BRICS are so damn anxious to make the US-dollar obsolete, why don’t we cut them off?? Yeah, why don’t you? [3] Could it be that the US Treasury Department is holding a lot of money for BRICS? Like trillions of dollars? If China is looking to pull Uncle Sam’s credit card, it doesn’t look like it will be anytime soon – they just added about $ 7-billion to the US Treasury holdings, this year, they tell us. [4] BRICS announced that their next meet is in 2015, in Russia at that – so, Uncle Sam, how is isolating Russia and imposing more sanctions working for you??

    • Albert  On July 19, 2014 at 3:07 pm

      The US currency is the only one large enough and could provide the kind of liquidity for multi million/billion dollar national transactions. It is the accepted international reserve currency and has the volume for many countries to hold in reserve. No other country currency has these capabilities. When they use US dollars they are subjected to the rules of those who control it. That means US Federal agencies. Witness the billion dollar fine imposed recently on that large foreign owned bank. So the BRICS countries have no choice but to have their funding in US dollars.
      Secondly, Russia is a large backward country with a strong military, oil and gas, vodka and lots of beggars. What the US did is to restrict their access to the international financial system which they need badly. Their stock market has tumbled and foreign investors are holding back. You don’t see this on TV but Russia will be hurt for a while at least. When Putin emotions have calmed down he will get the message.

  • gigi  On July 19, 2014 at 7:10 pm

    Actually, the bank will conduct business with the local currencies to dilute the dominance of the US dollar, the purpose for creating the bank in the first place. These countries already trade amongst themselves using their own currency. The monetary figure is the equivalent to the various currencies in terms of the U$. See:

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