The BRICS Bank

The world is a big place – there are over 190 countries and 7 billion people in the world, which really boggles the mind if you sit down and think about it. In addition to being an interesting intellectual exercise, this fact can also have broad implications for your investments and your financial future. It is easy to stay focused on U.S. firms, news, and events during the day-to-day grind, but it is always important to be aware of your surrounding – especially when it comes to your investments. With that in mind, this series of articles will focus on countries and investment opportunities outside of the United States that you might not hear about usually.

As always, be sure to consult a financial services professional familiar with both the potential investment and your unique financial situation before embarking on any investment program.

The BRICS Bank

The so-called BRIC nations (Brazil, Russia, India, and China), with South Africa included for this venture, have agreed to launch something known as the New Development Bank, also known as the BRICS Bank. This institution will be seeded with a $50 billion investment, coordinated evenly by all founding nations, and eventually is hoped to exceed $100 billion in investment assets. Following the formation on this institutions on Monday, in a BRICS only meeting, the leaders also met with several delegations from other South American countries. These meetings, held in Brasilia (the capital of Brazil), are seen are as turning point in BRIC financing.

This institution is seen by many as the BRICS and emerging market response to the U.S. and European dominance of the IMF and World Bank. The creation of this institution gives these nations more flexibility with regards to financing infrastructure projects as well as international finance overall. The bank’s first CEO will hail from India, and the institution will be headquartered in Shanghai, with other nations encouraged to join over time.

Several issues do remain however:

1) Which a headquarters in China, and China’s rising assertiveness overall, with this institution truly be a voice for all members?
2) How long will this grandiose agreement take time to get approval via the legislature in individual member countries?
3) Is China hedging its bets with the launch of the Asian Infrastructure Investment Bank?

Happy Reading!

http://www.ndtv.com/article/india/india-to-head-brics-100-billion-new-development-bank-559330

http://www.reuters.com/article/2014/05/02/kazakhstan-adb-banking-idUSL6N0NO1ZG20140502

http://news.yahoo.com/brics-create-development-bank-mini-imf-175644391.html

http://www.latimes.com/business/la-fi-brics-bank-20140716-story.html