The BRICS bank — an alternative that wasn’t, Pg6

Key Highlights:

• India is set to host the 18th BRICS summit in New Delhi on September 12-13, 2026, under the theme "Humanity First".
• The BRICS bloc aims to establish an alternative to the Western-dominated global financial order, including a bank to rival the World Bank and a reserve fund to reduce reliance on the International Monetary Fund (IMF).
• The New Development Bank (NDB), launched in 2015, was created to offer developing countries an alternative to the World Bank.
• The Contingent Reserve Arrangement (CRA), also established in 2015, was designed as a financial safety net for member countries.
• The article contends that these BRICS institutions have not yet materialized as genuine alternatives to the existing global financial system.

Detailed Insights:

• A significant portion of the NDB's outstanding bonds are denominated in U.S. dollars, with local currency lending at only 22% by mid-2025, falling short of its 30% target.
• The NDB relies on Western credit-rating agencies such as S&P, Fitch, and Moody’s, despite BRICS governments criticizing them as biased.
• In March 2022, the NDB froze all operations related to Russia, a founding member, to safeguard its credit standing.
• The NDB's total project approvals of $39 billion by the end of 2024 are considerably less than the World Bank Group's annual commitments of approximately $100 billion.
• The NDB frequently co-finances projects with the World Bank and IMF, suggesting a complementary rather than competitive relationship.
• The CRA has never been activated since its inception and mandates that member countries seeking to draw more than 30% of their allotted share must first engage with an IMF program.
• The concept of de-dollarisation is not explicitly mentioned in recent BRICS declarations, and member nations like India and South Africa express reservations about a common BRICS currency.
• BRICS countries advocate for a "quota-based and adequately resourced" IMF, indicating a desire for greater influence within the existing structure rather than its replacement.
• The U.S. holds 16.49% of IMF voting rights, which provides it with an effective veto over major decisions.
• The BRICS bloc has recently expanded its membership to include Egypt, Ethiopia, Iran, and the United Arab Emirates.

Key Concepts Involved:

• New Development Bank (NDB): A multilateral development bank established by the BRICS states to mobilize resources for infrastructure and sustainable development projects.
• Contingent Reserve Arrangement (CRA): A framework providing a liquidity safety net to BRICS member countries in times of financial stress.
• De-dollarisation: The process of reducing the global reliance on the U.S. dollar for international trade and financial transactions.
• IMF Quotas: Determine a member country's voting power, access to financing, and share in Special Drawing Rights (SDRs) within the International Monetary Fund.