MANILA, Philippines - Brazil, Russia, India, China and South Africa, collectively known as the BRICS nations, are forming a new development bank similar to the World Bank.
According to Bloomberg, a summit in Durban, South Africa this month will approve the plan to form a Bretton Woods-type of institution, the same principals that formed the World Bank and the International Monetary Fund (IMF).
“There’s a shift in power from the traditional to the emerging world. There is a lot of geo-political concern about this shift in the western world,†Martyn Davies Frontier Advisory chief executive, said.
Already, finance ministers and central bank governors from the BRICS nations agreed to set up currency crisis fund of about $100 billion.
The BRICS nations have a combined foreign-currency reserves of $4.4 trillion and account for 43 percent of the world’s population, according to the Bloomberg report.
Inter-BRICS trade is estimated to reach $500 billion, from the $282 billion in 2012. In 2002, trade between the five markets was a mere $27 billion.
The United Nations Conference on Trade and Development (UNCTAD) said that foreign direct investment (FDI) into BRICS nations amounted to $263 billion last year. That is 20-percent of global FDI flows, up from just six percent in 2000.
Goldman Sachs Asset Management chairman Jim O’Neill coined the BRIC term in 2001 to describe the four emerging powers he estimated would equal the US in joint economic output by 2020. Brazil, Russia, India and China held their first summit four years ago and invited South Africa to join their ranks in December 2010.
“At a minimum it symbolizes they can achieve something as political group and means lots of other things could follow in the future. It also means that they will have their own kind of special World Bank, which may aid infrastructure and trade projects,†O’Neill told Bloomberg.