Source: Bloomberg News
The biggest emerging markets
are uniting to tackle under-development and currency volatility with
plans to set up institutions that encroach on the roles of the World
Bank and International Monetary Fund.
The leaders of the so-called BRICS nations — Brazil, Russia, India, China
and South Africa — are set to approve the establishment of a new
development bank during an annual summit that starts today in the
eastern South African city of Durban, officials from all five nations
say. They will also discuss pooling foreign-currency reserves to ward
off balance of payments or currency crises.
“The deepest rationale for the BRICS is almost certainly the creation
of new Bretton Woods-type institutions that are inclined toward the
developing world,” Martyn Davies, chief executive officer of
Johannesburg-based Frontier Advisory, which provides research on
emerging markets, said in a phone interview. “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.”
The BRICS nations, which have combined foreign-currency reserves of
$4.4 trillion and account for 43 percent of the world’s population, are
seeking greater sway in global finance to match their rising economic
power. They have called for an overhaul of management of the World Bank
and IMF, which were created in Bretton Woods, New Hampshire, in 1944,
and oppose the practice of their respective presidents being drawn from
the U.S. and Europe.
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