Table of Contents
- Introduction
- The BRICS Nations: Who They Are and Why They Matter
- The Rationale Behind Creating a New Bank
- The Fortaleza Summit of 2014
- Founding Principles and Objectives of the NDB
- Capital Structure and Governance
- Contrast with the IMF and World Bank
- Regional and Global Reactions
- Early Projects and Achievements
- Challenges Facing the NDB
- Geopolitical Implications
- Evolving Role of BRICS in World Finance
- Conclusion
- External Resource
- Internal Link
1. Introduction
On July 15, 2014, the five BRICS nations—Brazil, Russia, India, China, and South Africa—made a landmark move in the world of global finance by founding the New Development Bank (NDB). Announced during the Fortaleza Summit in Brazil, the BRICS Bank represented an ambitious effort to create a financial institution run by and for emerging economies, providing a direct alternative to Western-led organizations like the World Bank and International Monetary Fund (IMF).
2. The BRICS Nations: Who They Are and Why They Matter
The BRICS bloc emerged in the early 2000s as a shorthand to describe the world’s major emerging markets. These five countries collectively account for over 40% of the global population, nearly 25% of the world’s GDP, and a growing influence in geopolitical and economic affairs.
Each member brought unique strengths:
- Brazil with its natural resources,
- Russia with energy exports,
- India with its tech and service sectors,
- China with manufacturing prowess,
- South Africa as a gateway to the African continent.
By 2014, these nations were not just rising economies—they were global players eager to reform the rules of international finance.
3. The Rationale Behind Creating a New Bank
The existing financial architecture, built after World War II, was heavily dominated by Western powers. Institutions like the IMF and World Bank had been criticized for their stringent loan conditions, limited representation for developing countries, and alignment with U.S. foreign policy goals.
The BRICS nations shared a common frustration: they contributed significantly to global growth, yet held disproportionately little sway in financial governance. The solution? Create their own institution—one that would reflect their priorities, offer flexible lending, and promote sustainable development on their own terms.
4. The Fortaleza Summit of 2014
The official announcement came at the 6th BRICS Summit, held in Fortaleza, Brazil. Leaders Dilma Rousseff, Vladimir Putin, Narendra Modi, Xi Jinping, and Jacob Zuma signed the agreement to create the NDB, headquartered in Shanghai, China.
The bank was envisioned as a complement, not a competitor to existing institutions. Its focus would be infrastructure and development projects in emerging and low-income countries—places often underserved by Western lenders.
5. Founding Principles and Objectives of the NDB
The NDB was founded on a clear set of principles:
- Equality in voting rights (unlike the weighted systems of the IMF and World Bank)
- Emphasis on infrastructure, green energy, sustainable urbanization, and technology transfer
- Non-interference in internal affairs of member countries
- Commitment to south-south cooperation and inclusivity
This new framework was more attractive to countries wary of Western-style structural adjustment policies.
6. Capital Structure and Governance
At launch, the NDB was capitalized with $100 billion, with each BRICS nation contributing $10 billion in paid-in capital and $40 billion in callable capital.
Leadership would rotate among the five nations. The first president was K.V. Kamath, a respected banker from India. The board of governors and directors was designed to reflect parity, with each country having equal representation, regardless of GDP or political power.
7. Contrast with the IMF and World Bank
Whereas the IMF often imposes policy reforms as loan conditions, the NDB aimed to offer financing with fewer strings attached. It also pursued local currency lending, reducing recipient nations’ dependence on the U.S. dollar.
Moreover, while the World Bank’s leadership is traditionally American, and the IMF’s is European, the NDB was founded with the explicit understanding that leadership would be shared and rotated.
8. Regional and Global Reactions
Reactions to the NDB’s founding were mixed. Many developing countries welcomed the move as long overdue, and praised BRICS for taking initiative.
Western analysts were more skeptical, questioning the bank’s capacity and cohesion, given the political and economic differences among BRICS members. Still, most agreed that the NDB signaled a meaningful shift in the global economic balance.
9. Early Projects and Achievements
The NDB began disbursing funds in 2016, supporting renewable energy, transportation, water infrastructure, and technology upgrades. Among its first projects:
- Solar power development in India
- Highway construction in Russia
- Renewable energy investments in South Africa
As of the early 2020s, the bank had approved dozens of projects totaling billions of dollars, with an emphasis on sustainability.
10. Challenges Facing the NDB
Despite its promise, the NDB has faced hurdles:
- Political instability in member states
- Currency fluctuations
- Internal disagreements on policy
- Limited staff and operational capacity
Moreover, some critics argue that without reforms, the NDB could replicate the same inefficiencies and inequalities it was designed to avoid.
11. Geopolitical Implications
The BRICS Bank is part of a broader movement to de-dollarize the global economy and reduce dependency on U.S.-led institutions. Alongside the Contingent Reserve Arrangement (CRA)—a currency pool also launched at the Fortaleza Summit—it allows BRICS countries to assist each other during economic crises.
This reflects a deeper push toward multipolarity in global governance, especially as China and Russia seek to reshape the international order.
12. Evolving Role of BRICS in World Finance
A decade after its founding, the NDB remains a symbol of emerging market collaboration. It has expanded membership beyond BRICS, including countries like Bangladesh, UAE, and Egypt.
As Western economies face stagnation and internal discord, BRICS and the NDB present a dynamic alternative. While not yet rivals to the IMF or World Bank, they increasingly serve as parallel institutions with growing legitimacy.
13. Conclusion
The founding of the BRICS Bank on July 15, 2014 marked a watershed moment in global finance. For the first time in modern history, major developing nations pooled their resources to build an institution reflective of their interests.
The NDB stands not just as a bank, but as a challenge to financial orthodoxy, a step toward rebalancing global power, and a bold experiment in south-south cooperation. While it still has far to go, its very existence proves that emerging economies are no longer content to simply follow—they are ready to lead.
14. External Resource
Wikipedia – New Development Bank
