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Major developing economies launch BRICS Bank in Shanghai

THE New Development Bank, more commonly known as the BRICS Bank, was officially launched in Shanghai today.

The new bank is expected to become a sustainable and innovative complement to the existing world banking system and produce new development, participants said at the opening ceremony.

Chinese Finance Minister Lou Jiwei said the new bank is created to encourage all-inclusive cooperation among developing countries, led by Brazil, Russia, India, China and South Africa.

“Its creation is to meet the urgent demand of such countries in infrastructure construction and beyond,” Lou said, adding it will complement the existing international banking system, instead of challenge it.

K.V. Kamath, president of the newly established NDB and a former official at the IMF, said he was confident to deliver people’s expectation of the new bank.

“Countries should closely cooperate,” Kamath said. “We will listen carefully to our members and try to offer tailor-made services for them.”

Shanghai Mayor Yang Xiong said the city will make its best to facilitate the growth of the new bank, which may in turn bolster the city’s development.

The idea of setting up a BRICS bank originally came from renowned economists Nicholas Stern and Nobel Laureate Joseph Stiglitz in 2011, and the five host countries signed an agreement last year, which decided the purpose of the bank is to “mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, complementing the existing efforts of multilateral and regional financial institutions for global growth and development.”

The BRICS economies have combined to produce more than half the world’s economic growth over the past decade.  The bloc as a whole remains the engine of world economic growth. All five nations are carrying out structural reforms to create balanced, sustainable growth in order to unlock domestic demand.

Within the BRICS framework, economic ties have improved over the past six years since the bloc’s first summit was held. Trade among BRICS nations in 2013 totaled US$350 billion, 2.5 times the value six years ago. China is now the largest trading partner of Brazil, Russia and South Africa, and India’s second-largest trading partner.

At the end of last year, China’s accumulative investment in the other four countries exceeded US$55 billion.

The five nations, with 42.6 percent of the world’s total population and roughly one third of the world’s land area, have a combined GDP accounting for about one fifth of the world total. Each country has its own comparative advantages, including human and natural resources.


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