Friday, 18 July 2014 11:09

BRICS Development Bank: What does it mean?

By Fernando Faria, Founder, innovaBRICS & Beyond

And finally we have official announcements that BRICS Development Bank will be formed.

With its HQ in Shanghai and India getting the first rotating Presidency, the New Development Bank (NDB, as it will be called) will be formally created after approval by all five BRICS national parliaments.

So much has been said in the past few days as to whether the NDB will be an effective player in providing a more inclusive funding platform for BRICS and non-BRICS developing nations. Skepticism is natural and expected after so much procrastination and lack of coordination from the five founding countries.

But in my opinion this is part and parcel of setting up any multi-lateral institution, especially with growing economies its the heart of it, "growing pains" as they say.

One of the main criticisms on emerging markets historically has been the tendency to over-promise but under-deliver. So the fact we were able to work around our differences on the highest level of public policy is a victory in itself.

It means we've decided to put aside petty competition and join forces for a common cause and this is enough reason to feel optimistic, if cautiously so.

This week's announcement may create the right environment to encourage further intra-BRICS plans like long-rumoured BRICS submarine cable and a joint stock market index, just to name a couple.

It is still a long road towards establishing a new and legitimate global player, which would genuinely tip the balance in world affairs towards often under-represented emerging markets.

But without delving too much into NDB's quotas, terms & conditions, governance and ultimately is ability to make a difference in the geo-political scenario, I think we the BRICS & Beyond community have a good enough reason to feel some sense of achievement.

The fact we set ourselves an achievable goal and actually delivered on it is a strong statement of intent and hopefully an indication that more can be achieved.