The BRICS grouping of emerging market nations — Brazil, Russia, India, China, and South Africa — will see their own $100 billion development bank, The New Development Bank (NDB), also known as the BRICS bank, in operation by the end of 2015, South Africa’s Finance Ministry said on Friday.
“The New Development Bank is expected to be operational by end of 2015,” the South African Finance Ministry said in a statement that announced the nomination of South African banker Leslie Maasdorp as Vice President of the bank.
Maasdorp, the head of Southern African Operations for Bank of America Merrill Lynch, was formerly an advisor to the current head of South Africa’s central bank, Tito Mboweni, and led the privatization programme for the South African Government when he served as Deputy Director-General from 1999 to 2002.
In July 2014, a historic milestone for the BRICS group was reached as the group signed a document to form the the $100 billion New Development Bank (NDB) and a reserve currency pool worth over $100 billion, also known as the Contingent Reserve Arrangement (CRA).
The BRICS bank will be used to finance infrastructure projects in the BRICS countries as well as other emerging market countries.
The launch of the BRICS bank is seen as a first step to break the dominance of the U.S. dollar in global trade, as well as dollar-backed institutions like the IMF and the World Bank, both U.S.-based institutions that BRICS countries have had little influence within.
In addition to the new bank and reserve currency pool, Russia has recently proposed an alternate to the SWIFT global interbank payment system for the BRICS group in a move which would further ramp up de-dollarization efforts and threaten the U.S. dollar’s global hegemony.
Earlier in June, during the first-ever BRICS Parliamentary Forum held in Moscow, Zhang Dejiang, the Chairman of the Standing Committee of China’s National People’s Congress (NPC), said that the BRICS should move toward a single trade and economic market, in addition to creating and promoting projects and tools for global economy control.
“We must strive for moving towards the creation of a single market in trade and economic cooperation, the creation of a multi-level mechanism of currency agreements, new infrastructure projects and strengthening cooperation on the basis of the people’s support. The key tools here include the BRICS Bank and the BRICS reserve currencies pool,” said Dejiang.
Alexsey Pushkov, the head of Russia’s State Duma Foreign Relations Committee, said during the forum that the combined gross domestic product (GDP) of the BRICS group will exceed that of the Group of Seven (G7) member states in the next two to three years.
A rating agency for the BRICS group is also being discussed at an expert level, as an alternative to the western dominated ‘big three’ rating agencies.
Russian President Vladimir Putin has said that he expects to launch the new BRICS bank in addition to the currency reserve pool during the July summit of the Shanghai Cooperation Organisation (SCO) and BRICS.
The summit of SCO and BRICS is set to take place in Ufa – the capital city of the Republic of Bashkortostan, Russia – on July 8-10, 2015.
The BRICS group was established in 2010, when South Africa joined Brazil, Russia, India, and China in what was previously known as BRIC. The BRICS group represents 42 percent of the world’s population and roughly 20 percent of the world’s economy based on GDP, and 30 percent of the world’s GDP based on PPP. Total trade between the countries is $6.14 trillion, or nearly 17 percent of the world’s total.