The BRICS Development Bank
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The BRICS Development Bank is expected to start operations in 2016, providing a crucial two-year window to state the policies and instruments that would define the scope of its operations. We think the BRICS countries should meet the call to develop an institution that is revolutionary in its vision and the manner in which it functions. The Bank is expected to not only address developmental challenges within the five countries that are leading it, but also generate greater resources for sustained growth across the global South by harnessing savings from within its membership and mobilizing resources from other middle-income countries and potential supporters. Towering ambitions for the Bank include the development of an intra-BRICS currency market through measures taken to serve easy conversion of the real, ruble, rupee, renminbi and rand, thereby allowing a diversification of foreign exchange reserves. Those enthusiastic about the BRICS ability to challenge the current financial system believe the creation of the BRICS reserve currency could challenge the present dependence on the US dollar as the only global reserve currency and is positioned at par with IMFs Special Drawing Rights (SDR).
Thus, the creation and launch of the New Development Bank is very critical to the context of the political and economic disruptions that have come to fore since the crisis of 2008 that has left us economically fragile, politically unstable and accompany new development challenges that require new and innovative thinking and approaches that tackle these fundamentally existent problems. Skepticism about individual competencies and interests within the BRICS notwithstanding, the new Development Bank offers a first institutional apparatus for the emerging economies to construct a more holistic and even radical agenda of development than has been possible in the context of the traditional world order. Now, it’s crucial that BRICS commit to take this initiative beyond traditional banking notions and instead define and detail a transformational vision and agenda for the New Development Bank.
This would include demonstrating conceptual and operational leadership on the agenda of ‘sustainable development’ that is a stated objective of the BRICS Development Bank. A commitment to sustainable development requires the BRICS Bank to go beyond a market-orientation of growth to demonstrate a combined emphasis on social, environmental and economic aspects of development across its projects. The Bank must adopt a vision of ‘sustainable development’ that is directed towards ending deprivation and building human capacities, while also paying attention to the responsible use of natural resources within planetary limits. At a macro level, the New Development Bank must represent the firm understanding that in the present day, inequality is a major barrier to growth. A focus on addressing social exclusion, on achieving gender equality, and on fulfilling the rights and needs of the most marginalized and vulnerable groups in a society is not just essential but crucial if the New Bank is to make a difference.
This would involve working to end extreme inequality so that wealth, opportunities and assets are shared fairly; within and between countries, and recognizing that increased capacities for domestic revenue mobilization, and improved tax transparency and accountability systems are an integral part of the challenge to end extreme inequality. Positions and strategies of the Bank must be backed by strong mechanisms for public and political debate and a dedicated plan to develop competent and mutually coherent institutional capacities. The need to ensure that the policies and practices of the Bank are in accordance with the commitment to South-South cooperation and global standards of human rights, social and environmental justice are agreed to and actively pursued in the process. There is a need for the BRICS Bank to establish an ongoing process of information sharing and consultation with civil society and other stakeholders across internal and external aspects of its operation.
The effective engagement of stakeholders and transparency about the role and activities is an extremely important challenge that confronts the Bank. Currently, information around the extent and impact of BRICS related corporate activities in other regions is severely limited and a strong apparatus to ensure transparency around the activities and investments of the private sector in this regard is a must. Lastly, the idea of the New Development Bank has emerged due to the unequal power and resource allocation arrangements of the Bretton Woods Institutions, we hope the BRICS “will be the change” while establishing membership and governance structures for the Bank- equal contribution in the capital as the starting point for capital base of the New Bank and equal voting and decision making powers.