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BRICS New Development Bank To Open In China In 2015

BRICS New Development Bank To Open In China In 2015

The proposed BRICS New Development Bank will open in Shanghai, China, in 2016 and it will engage in infrastructure projects — mainly in the BRICS countries — according to the news agency ITAR-TASS.

An agreement on the bank will be signed July 15-16 at the next summit of the BRICS organization in Brazil’s Fortaleza, Russian presidential aide Yury Ushakov told journalists Thursday.

The proposed multilateral development bank will be operated by the BRICS countries –Brazil, Russia, India, China and South Africa.

BRICS countries decided to create the bank in 2013, when they saw investors pull money away from emerging economics, hurting their currencies, amid expectations that the U.S. would scale back its economic stimulus program, WallStreetJournal reports.

It is hoped a BRICS bank will create an alternative to the International Monetary Fund — a mini IMF — to support BRICS economies, Russia’s finance minister said Wednesday.

The move comes at a time when Moscow is facing antagonism in the West for the annexation of Ukraine’s region of Crimea and is an exile from the Group of Eight leading industrialized economies, according to WallStreetJournal.

Part of the agreement includes the creation of an exchange reserve pool by BRICS countries, planned

The short-list of cities for the bank’s headquarters included Shanghai and New Delhi. Shanghai prevailed, Russian Finance Minister Anton Siluanov said, according to ITAR-TASS.

The authorized stock of the bank amounts to $100 billion, the dedicated capital — $50 billion, the paid-in capital — $10 billion (paid upon request — $40 billion). The paid-in capital will be formed within seven years.

“Russia’s stake is $2 billion, that means the capital is proportionally distributed among the bank’s participants,” Siluanov said. There is an agreement between the countries that the stake of BRICS members in the capital will be at least 55 percent. The bank will engage in infrastructure projects mainly in the BRICS countries.

The pool of nominal exchange reserves will be able to quickly react to capital outflow providing it swaps the liquidity in convertible currency. It will amount to $100 billion. Distribution among member states will be as follows: China – $41 billion, Brazil, India and Russia — $18 billion each, South Africa — $5 billion. The national banks of the BRICS states will be keeping their resources designated as stakes in the pool within their gold and forex reserves.

The fund will serve as an emergency coffer for BRICS if a member risks currency depreciation or suffers from capital flight, according to WallStreetJournal.

The BRICS summit will be devoted identifying new sources of economic growth. Leaders will meet with the BRICS Business Council. According to Ushakov, Russia is represented by members of the Chamber of Commerce and Industry, Rostec state corporation, Russian Private Equity Fund, Russian Railways OJSC, and Vnesheconombank.

Leaders will place a special emphasis on the international agenda, in particular Syria and Afghanistan, the Middle East settlement and the Ukraine crisis. The five countries advocate political and diplomatic settlement of conflicts and reject force and sanction pressure as means of politics “violating other countries’ sovereignty,” Ushakov said.

The goal of the first day of the summit is to produce a Fortaleza declaration that reflects the BRICS view of “the current political and economic situation and the BRICS countries’ common approaches to the issues of international cooperation,” the presidential aide said.

Russian President Vladimir Putin will meet Chinese President Xi Jinping and recently elected Indian Prime Minister Narendra Modi. A breakfast with South Africa’s President Jacob Zuma is on the schedule.

The five leaders will go to Brazil’s capital for an outreach meeting with Latin American presidents and prime ministers to discuss prospects for cooperation in the region, particularly in trade and investments.

Putin will meet Venezuelan President Nicolas Maduro, Bolivian leader Evo Morales and have the first meetings with Uruguayan President Jose Alberto Mujica, ITAR-TASS reports.