The Multilateralist

Can the BRICS build a bank?

Can the BRICS build a bank?

India’s Business Standard reports on scheduled meetings of BRICS officials to discuss their  plan for a joint development bank:

Officials of BRICS countries are scheduled to meet in Pretoria, South Africa on January 10-11 to look at the viability and feasibility of setting up the bank. In February, finance ministers from these nations will meet to finalise the structure and thereafter, the leaders will approve it in March at the Durban summit.

Officials in India said all the countries are committed to creating the development bank for the region and the chances of a consensus are very high.

“It may start with small paid-up capital from BRICS countries and work on the World Bank’s model. The bank will have to raise funds from the market at a concessional rate and lend further to the BRICS countries at a low rate,” said a finance ministry official.

By some accounts, negotiations about the bank are endangered by competing visions of its role. Last week, the Wall Street Journal reported that China’s notion of a bank devoted to its own members and focused on large infrastructure projects is not accepted by other BRICS members:

South Africa wants the funding to be available for other developing nations. India, which proposed the development bank, likes the idea of infrastructure financing but fears that China wants to run the bank mainly to make yuan loans and further the international use of China’s currency, "One country wants to dominate due to its financial standing, which would not be acceptable to the others," said Brahma Chellaney, an analyst with the Centre for Policy Research, a New Delhi think tank.

Where to locate the development bank has become another battle. Mr. Liu says India wants the bank headquartered there, while China would "very much appreciate it" if the bank is located in Beijing, Shanghai or Chongqing. China is expected to chip in the largest share of the financing and "money talks," he said.