BRICS New Development Bank: No Common Currency Yet
The New Development Bank, a financial institution created by the BRICS group, doesn’t have any immediate plans for the group to create a common currency, according to its vice president and chief financial officer Leslie Maasdorp.
While the members of BRICS – Brazil, Russia, India, China, and South Africa – are pushing to conduct more trade between each other in their respective currencies, they aren’t ready to challenge the global dominance of the dollar, Maasdorp stated on Wednesday (July 5).
“The development of anything alternative is more a medium to long term ambition,” he said. “There is no suggestion right now to create a BRICS currency.”
The BRICS, which was formed in 2009, has been striving to gain more clout globally as a way of counterbalancing the dominance the US and its traditional allies have in multilateral financial institutions such as the World Bank and the International Monetary Fund.
But Maasdorp stated that even the Chinese RMB Yuan “is a very long way from becoming a reserve currency.”
A key part of the BRICS’ overall development strategy is the New Development Bank, which is headquartered in Shanghai, has US$50 billion in subscribed capital and plans to add several new emerging market member countries this year in a bid to expand its lending capability.
Already, in addition to the core BRICS countries, the bank also now includes Bangladesh and the United Arab Emirates among its members. Uruguay is in the process of joining and Saudi Arabia has applied to. “The intention has always been to create a global bank anchored in emerging markets.” Maasdorp said, adding that the bank aims to direct 40% of lending to climate related projects.
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