The leaders of the BRICS nations have pulled off a coup of sort in
announcing the establishment of a New Development Bank (NDB) with an
initial subscribed capital of $50 billion. Significantly, they have
chosen to share the capital equally among them. The capital base is to
be used for funding
infrastructure and “sustainable development” projects in the BRICS
countries initially. Other low and middle-income countries will be able
buy in and apply for funding subsequent as time progresses. They have
also created
a $100 billion Contingent Reserve Arrangement (CRA). This is to provide
additional liquidity protection to member-nations during balance of
payments problems. The CRA, however, is being funded 41 per cent by
China, 18 per cent each from Brazil, India, and Russia, and 5 per cent
from South Africa. CRA, according to the Declaration, is “a framework
for the provision of currency swaps in response to actual or potential
short-term balance of payments pressures.’’
Source : The Hindu
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