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BRICS to set up joint bank to rival West

Wed, 27 Mar 2013 12:32:07 GMT

As US and Europe are facing dire economic conditions and worsening financial crisis, the BRICS group of emerging economies -- including Brazil, Russia, India, China and South Africa -- has agreed to set up a new development bank to rival Western-backed institutions.

"It's done," South Africa's Finance Minister Pravin Gordhan said on Tuesday after meeting with his counterparts from Brazil, Russia, India and China on the first day of the annual BRICS summit in Durban, South Africa, on Tuesday.

The bank will be set up as an alternative to the International Monetary Fund (IMF) and the World Bank (WB) to break the WB's seven-decade monopoly on international financial markets and address the development needs of emerging and poor economies.

The proposal for a bank, with a collective foreign exchange reserve and a fund for financing developmental projects, was mooted to counter the influence of other global institutions, namely the World Bank and IMF, which are more tuned to pursuing policies set by the West, which are not accepted by BRICS member states.

These two international lending institutions (IMF and WB) continue to favor the interests of Europe and the United States, which in 2010 failed to ratify an agreement which would allow more IMF funds to be allocated to developing nations.

The emerging economies appear to find the dominance of Washington and its European allies over the international creditors unbearable.

Each of the five BRICS nations is now to contribute up to USD 10 billion for the launching of the development bank, which could take several years to be up and running.

Meanwhile, the two largest economies of the emerging power groups, China and Brazil, have signed a currency swap deal, under which they will be using their own currencies for almost half of their trade exchanges.

The five-member bloc collectively accounts for about three billion people -- or 40 percent of the world's population. They also make up 30 percent of the world's land mass, 20 percent of the gross domestic product in real terms, and 26 percent of global purchasing power.

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