Leaders from Brazil, Russia, India, China and South Africa (the BRICS) met in Durham, South Africa this week to discuss a new world bank which will allow them to trade and fund their projects independent of the World Bank and the U.S. Dollar.
South African President Jacob Zuma saud that the group has “decided to enter formal negotiations to establish a BRICS-led new development Bank based on our own considerable infrastructure needs, which amount to around $4.5 trillion over the next five years.”
Today Brazil and China announced that they will do business using each other’s currencies instead of using the U.S. Dollar – the world’s predominate reserve currency.
As the BRICS development bank matures, the members hope it will allow some of the world’s largest emerging economies to ignore and later supplant the World Bank and IMF.
Others are skeptical. .
Chief executive of the Johannesburg-based Frontier Advisory Martyn Davies said “I think there was too much hype around it”. Davies continued saying that the BRICS”are still battling to create the economic institutions to back their geopolitical rhetoric … the rhetoric is not supported by the substance.”
Where the World Bank has been largely the puppet of the U.S. and the IMF under the hand of Europe, the BRICS development bank effort is being largely pushed by China.
Many of the nations involved are economic powerhouses in their own regions, but the group is not yet a functional alliance. Many experts believe that for the bank to emerge as a global economic power, it will need to pull in new members from other emerging nations.