The BRICS group of emerging powers have launched a $100bn development bank to be based in the Chinese city of Shanghai, according to a joint declaration.
The group will set up the new bank, with the capital equally shared among the BRICS members – Brazil, Russia, China, India and South Africa.
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The New Development Bank’s first president will be from India while the board’s chairman will be Brazilian, according to the declaration released at a summit in Fortaleza, Brazil.
Tuesday’s deal was reached after intense last-minute negotiations to settle a dispute between India and China over the headquarters of the new bank.
Brazilian President Dilma Rousseff said setting up the currency reserve was a priority for the countries to protect themselves from crisis scenarios: “It will be a kind of security net to increase protection for BRICS countries as well as other countries. It’s a question of our security.”
The other four leaders present were Russian President Vladimir Putin, Chinese President Xi Jinping, Indian Prime Minister Narendra Modi and South African President Jacob Zuma.
The bank and fund are seen as counterweights to the Western-dominated World Bank and International Monetary Fund, which BRICS nations say need more reform to give emerging nations more voting rights.
India’s presidency of new BRICS bank will be for five years, according to the Reuters news agency. Reports say that no decision has been made yet regarding which country will hold next presidency.
The bank is expected to make its first loan in 2016.
The BRICS countries have a shared desire for a bigger voice in global economic policy.
They now account for 21 percent of global economic output and have contributed more than 50 percent of world economic growth in the past decade.