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About Me


Darren Winters is a self made investment multi-millionaire and successful entrepreneur. Amongst
his many businesses he owns the number 1 investment training company in the UK and Europe.
This company provides training courses in stock market, forex and property investing and since
the year 2000 has successfully trained over 250,000 people.


Wednesday 16 July 2014

A New Bank for the BRICS


As five leaders, representing nearly half of the world’s population, descended on the Brazilian city of Fortaleza to attend the sixth BRIC’s (Brazil, Russia, India, China and South Africa) Summit, scheduled for July 15-16, elaborate security measures were being put in place, street drains within proximity were meticulously inspected, local police had cordoned off the area to traffic and military jets prowled above the skies ensuring that the no fly zone within proximity of the Summit’s venue were observed. But it wasn’t the security activities around Fortaleza (Fortress) that grabbed the headline, but rather what was being discussed inside the Summit. 

As the leaders sat around a table, they were discussing the potential end of, what they perceived to be, the way mega business, aided and abetted by the US and its allies, had an unchallenged ability to exert a wielding influence over the world’s economy since the end of WWII. The International Monetary Fund (IMF) and the World Bank, both institutions established almost 60 years ago by the world’s most powerful nations in the aftermath of WWII, is increasingly being viewed by the group of BRICS nations as pretty much the facilitators for US and allied economic supremacy. While the World Banks and the IMF, both share the same aim of ending extreme poverty and boosting shared prosperity this seems less realistic today with rising inequality, even among developed nations. Moreover, these altruistic goals are perhaps a smokescreen for their true function, according to critics who believe that these financial institutions are merely tools of corporatocracy, a society or system governed by corporations. “When the IMF or World Bank lends money, strings are invariably attached, and those strings tend to reflect the values and interests of Washington and its allies,” said an analyst at the Institute for Development Studies in Sussex, UK.

So the BRICS plan, to resist a society ruled by big business and White House policies, is to launch its own development bank, called the BRICS bank and a monetary stabilization fund called the Contingent Reserve Arrangement (CRA). Indeed, adding flesh to the bones, BRICS nations were able to conclude at the Summit in Fortaleza the financing structure of the BRICS bank and CRA. Both BRICS financial institutions will rival the World Bank and the IMF and are scheduled to be launched at the conclusion of the Summit. The choice of city is expected to be made soon along with the leadership of the bank, which will be rotated every five years.

The CRA will have 100 billion, with China being the largest contributor of 41 billion USD; Brazil, India and Russia, with all contribute 18 billion USD each and South Africa will add 5 billion USD to the fund. The BRICS Development Bank will begin operation with a capital of 50 billion dollars with contributions of 10 billion and guarantees of 40 billion from each of its members. The BRICS Bank has ambitious expansionary plans. It intends to expand 100 billion dollars within two years, and up to 200 billion in five years. The Development Banks projected capacity for financing projects is anticipated to total 350 billion USD by 2019. This is certainly by no means small beer. 

Therefore, assuming the BRICS Development Bank and CRA are successful, it would be reasonable to assume that these newly formed financial institutions could then end the monopoly stranglehold that the IMF and the World Bank’s has over financing large scale international development projects. Additionally, for the economies involved in the architecture of BRICs financial institution, being able to circumvent the World Bank and the IMF for development aid and apply to their own group’s BRICS Development Bank may be a real boon. The BRICS economies might be able to benefit from the no strings attached financing of the group of countries new BRICS Development Bank. Previously, much World Bank development aid concerning hefty infrastructure projects in developing countries tended to be tied down to the approval of finance, which was subject to contracts being awarded to US and western corporations. Moreover, interest payments on the loans made also resulted in payment outflows from the BRICS economies. In view of this, it then becomes fairly apparent that the creation of BRICS Development Bank, in theory is likely to be a boost to BRICS companies, their bank and its economies. 

On the other hand, the implications for US and allied corporate titans may not be so favourable in so much as it could also extinguish an era of plum public contracts being awarded on a silver plate to these corporations. There might also be the added risk that the BRICS Development Bank could deliberately or by chance promote policies within BRICS nations and beyond that are at odds with those of the White House. So it’s reasonable to assume that the BRICS bank could act as a facilitator in the shifting of economic and political power from the West to the East.

However, the extent to which this power and political shift plays out depends on the BRICS Development Bank’s effectiveness as a means of financing infrastructure projects within the group’s countries and beyond. If the BRICS bank is just another replica based on the IMF and World Bank model, with its criticized shortcomings, then its influence may not be as significant as anticipated by its architects. Like any institution, it is run by human beings who often have self-serving interests, combine this with little transparency and practically no press freedom in a number of BRICS countries and it might just be the perfect cocktail for a few oligarchs becoming even more powerful at the cost of many. That would be worse than corporatocracy.

But that’s maybe just a cynical view, on the upside the BRICS Development Bank has maybe got the world’s financial architects thinking about the need for change. If that is the case, then let’s hope that what emerges is for the greater good.


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