Following a summit in New Delhi on March 29, 2012, the BRICS countries (Brazil, Russia, India, China, and South Africa) announced the proposal for a shared development bank. The idea is that this BRICS bank would provide an alternative to the U.S.-dominated World Bank and even have the ability to protect the developing world from financial problems originating in wealthier nations. Only a day after the summit in New Delhi, president of the World Bank Robert Zoellick said that the World Bank is interested in partnering with the BRICS bank and would be willing to share knowledge regarding global operations with the new bank.
The leaders of the BRICS countries offered several reasons why the BRICS bank should be created. South African President Jacob Zuma said that the new bank would support important infrastructure projects and would also help create trade, investment opportunities, and jobs in the BRICS nations. Russian President Dmitry Medvedev argued that the current world financial system is outdated and needs to be reformed to account for the major role played by the BRICS countries. There is little doubt that the BRICS countries do indeed play a major role in world financial system because together they account for 42% of the world population and more than a quarter of world trade.
According to Zoellick, creating the BRICS bank will not be an easy task as many challenges will have to be overcome. Some of the foreseeable challenges would be agreeing on a capital composition, governance structure, location, and an individual to head the bank. Zoellick added that another key challenge would be getting a top credit rating, which would guarantee access to inexpensive cash.
If the BRICS bank is able to take root, I believe it would not only economically benefit the BRICS countries but other emerging countries as well. It would offer a solid alternative to the World Bank that would perhaps be better suited for emerging countries and developing countries around the world. Feel free to comment below on this issue and whether you support this initiative or not.