Shanghai likely to be HQ of BRICS development bank
- By Zhang Fang
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E-mail China.org.cn, July 15, 2014
Shanghai is very likely to host the headquarters of a new international development bank being launched by the BRICS countries, Brazil, Russia, India, China and South Africa, according to Yuri Ushakov, a Russian presidential adviser.
He told Kremlin reporters last Thursday that the bank would be based in Shanghai, China's financial capital, Xinhua News Agency reported.
The new bank will help developing countries to further improve their infrastructure projects and increase their overseas profits.
However, the location of the development bank has not yet been decided. On July 11, Rob Davies, trade and industry minister of South Africa, said the country will push for the development bank to be located in Johannesburg.
While Anton Siluanov, financial minister of Russia said the headquarters will be in either New Delhi or Shanghai.
Yukon Huang, a former country director for the World Bank in China, said the reason people are hesitating to pick Shanghai is that they are worried that the move would make the BRICS countries too reliant on China.
The five emerging market nations have decided to invest US$100 billion in the development bank, and the investment will be divided equally between the five countries.
The BRICS will also set up a US$100 billion foreign exchange reserve pool called the Contingent Reserve Arrangement (CRA), which aims to offer emergency fund to BRICS members in case of a debt crisis or problems with capital flight.
The new institutions are intended to provide developing countries with alternatives to the World Bank and International Monetary Fund (IMF). However, the two organizations said they will offer help to BRICS countries in many ways, according to Xinhua.
China will contribute US$41 billion to the reserve pool, while Russia, Brazil and India will offer US$18 billion and South Africa $5 billion, according to a press release issued by the BRICS last Thursday.
The countries are hoping to sign off on the new bank on July 15, along with the reserves fund, after two years of negotiations, following the South Africa BRICS summit.
