The Durban summit of BRICS has on the agenda the idea of creating a BRICS bank to fund infrastructure development and other projects in the emerging countries. The previous summit in New Delhi last year adopted the resolution of building such a bank. It also agreed to create a framework for BRICS countries to trade in local currencies to some extent in order to hedge against the problems that the dollar and the euro have been facing. The Durban summit aims to set up a currency reserve pool which BRICS economies can dip into temporarily to meet a BOP crisis. The ASEAN countries built a reserve pool of $ 240 billion in 2012 to combat the global meltdown in 2008. The BRICS bank concept is an attempt to enable developing countries to create an alternative institutional architecture to cater to growing aspirations.
The IMF and the World Bank have not responded very much to this idea. The IMF is focused entirely on the eurozone crisis and seems to have little time to attend to the problems of the developing countries. The emerging countries have to work out their own bulwark. Hence the BRICS bank idea assumes importance. Western analysts however regard the proposal with some reservations. It is felt that China, the largest economy will try to dominate all such institutions and put India, Brazil, Russia and South Africa in the background. It is up to China to dispel such misgivings. BRICS represents 45% of world population and nearly 50% of the world’s GDP. It has every reason to go ahead with new ideas and this is the time to get down to business. Growth in BRICS countries has gone down and a potential capital pool can stimulate their investment and growth.