Challenges to the BRICS Bank

Share This

The New Development Bank created by BRICS countries can help African countries’ projects to tackle their most urgent challenges, the bank’s president Dilma Rousseff, said on Thursday. During the BRICS Summit in Johannesburg, Rousseff also noted that the bank would finance physical and digital infrastructure projects in Africa and educational ones.

The BRICS bank is a significant step in creating a less crisis-prone international financial system. In the past two years, geopolitical conflicts and volatile global markets have exacerbated many developing countries’ economic challenges. Against this backdrop, the emergence of a new multilateral development bank led by China and emerging powers like Russia and Brazil may signal a shift away from US dominance over the world’s international financial system.

However, some severe challenges to the BRICS bank must be addressed to fulfill its potential. One is that its founding members have different economic fundamentals and trade patterns. Russia and Brazil export commodities, while China and India export manufactured goods. In addition, they are either current account surplus or deficit countries, and their monetary policy approaches vary widely. The result is that the BRICS bank will have to develop its unique approach to financing to be successful.

Another challenge is that the BRICS bank must establish its values. BRICS has to be willing to make its loan conditions more stringent than existing multilateral development banks’ standards to escape from Western hegemony and provide equal treatment for developing countries. However, if the BRICS bank goes too far with its values-based mandate, it can be seen as a hypocritical institution.

Finally, the BRICS bank will have to be clear about what kinds of projects it will fund and whether or not those projects are in the best interests of its member states. It should avoid funding projects with environmental or social concerns, as this could damage the credibility of the BRICS bank in its home markets and undermine its ability to attract additional capital from private investors.

As the BRICS bank starts operations, the Coalition for Human Rights in Development will work with members and allies to track its progress and assess whether it is fulfilling its promise to be a powerful and independent force in global development.

Tags

Greetings, dear readers! Welcome to the blog, a realm of words and ideas crafted to captivate and inspire. Today, we invite you to embark on a journey of discovery as we introduce ourself, the author behind the articles that grace this virtual abode.

Leave a Reply

Your email address will not be published.