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Up in the air with the BRICS Development Bank

August 17, 2012

The creation of the BRICS Development Bank was the big news this year in the development community. After its announcement in March, the first meeting to discuss the business model of the Bank took place this week at the Brazilian Development Bank (BNDES) headquarters in Rio de Janeiro.

What is on the table now is the negotiation of shareholding structure, governance, location and leadership, as reported by Assis Moreira from Valor Econômico, a Brazilian newspaper. According to him, India wants the total capital to be around US$50 billion (18% of the World Bank or 57.5% of the Inter-American Development Bank), while Brazil advocates for equal shares among the five founding members, Brazil, Russia, India, China and South Africa. By March 2012, when the next meeting will take place in South Africa, we will probably have more clarity on the output of the main discussions. 

There are plenty of reasons to be optimistic about the creation of the BRICS Development Bank. While those countries still have high levels of poverty, they also still have a lot to gain by being better integrated amongst themselves and with other developing countries.

However, uncertainties about how the Bank will actually work are still up in the air. I would like to go through a few questions here about likely aspects of the negotiations that might be interesting for debate and consideration:

  • Is the BRICS Bank aiming to be just one more international development bank? What will be its distinguishing characteristics or activities?
  • What is the development model it will adopt?
  • What is the future of bilateral and triangular South-South Cooperations?
  • Will donor cooperation be a greater challenge than it is already?
  • How can the BRICS Bank get cheap credit in the financial markets?
  • How will the BRICS Bank operate in conjunction with the National Development Banks?
  • Is it time for transparency?
  • Why include just BRICS countries?
  • A new name is needed!

In the next weeks I will comment on each question separately in different posts. I look forward to a lively discussion!

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