Beijing (AsiaNews) – After three years of negotiations, BRICS countries (Brazil, Russia, India, China, and South Africa) launched their New Development Bank (NDB) based in Shanghai.
The new institution’s unstated goal is to act as an alternative to existing western-dominated financial institutions, namely the World Bank, whose head is traditionally an American, and the International Monetary Fund, usually chaired by a European.
Proposed for the first time at the BRICS summit in March 2013 in Durban (South Africa), the new bank was given the green light at the group’s last summit in early July in the city of Ufa (Russia), where final details were discussed.
The NDB will lend money to developing countries to help finance infrastructure projects. It will be chaired alternately by a representative of member countries and it is expected to provide its first loan at the beginning of 2016.
At the Ufa summit, BRICS nations expressed frustration with the voting mechanisms in the two western-dominated financial institutions. The new bank is seen as an alternative to the World Bank and the International Monetary Fund, although the group says it is not a rival.
"Our objective is not to challenge the existing system as it is but to improve and complement the system in our own way," NDB President Kundapur Vaman Kamath said.
Russian Foreign Minister Sergei Lavrov said that the five countries "illustrate a new polycentric system of international relations". In fact, Russian President Vladimir Putin has sought out Chinese cooperation during the Ufa summit.
China, the world's second largest economy, will be the NDB’s biggest contributor.
Last year, it is set up another new international bank, the Beijing-based Asian Infrastructure Development Bank.
The NDB is to start out with a capital of US$ 50 billion although the amount is to be doubled in the coming years.