The group of emerging market economies have launched their latest effort to face the dominance of Western lenders. Despite the general opinion that the bank is a means to oppose the International Monetary Fund and World Bank, China
insists the institution is meant to 'supplement' not threaten the current
system.
On Tuesday the BRICS group of emerging economies opened its New Development Bank (NDB) in China's commercial hub Shanghai.
The bank will start out with $50 billion in
authorized capital, provided by Brazil, Russia, India, China and South
Africa - which intend
to double the sum in the coming years.
Operations are scheduled to start early next year.
The final touches to the NDB were put earlier this month, at the summit in the Russian city of Ufa, at which the leaders of the five member states agreed a joint currency pool.
Chinese Finance Minister Lou Jiwei said at the opening ceremony in Shanghai that "The NDB will supplement the existing international financial system in a healthy way and explore innovations in governance models."
"It can help strengthen the currency markets and maintain a stable financial order through the internal stabilization of the BRICS countries," Li Daxiao, chief economist of Yingda Securities commented.
Earlier this month, Russian President Vladimir Putin said that "the New Bank will help finance joint, large-scale projects in transport and energy infrastructure, and industrial development."
Putin whose relations with the West have been strained due to the Ukrainian crisis, called the bank an "alternative to the existing US-dominated World Bank and international Monetary Fund."
Indeed, at the moment, the Washington-based organizations control much of global
lending operations targeted at spurring economic growth and reducing
poverty, but have in recent years been largely criticized,
with
developing nations complaining they don't have a big enough say. Meanwhile, the BRICS group is betting that the New Development Bank can correct this lopsideness.
The group represents some 40 percent of the world's population and accounts for about a fifth of global economic output.
Commenting the launch, World Bank president Jim Yong Kim said in a statement: "We are committed to working closely with the New Development Bank and other multilateral institutions, offering to share our knowledge and to cofinance infrastructure projects."
Although Chinese analysts keep claiming the bank is aimed at complementing instead of challenging the existing international institutions, many say that the NDB represents China's latest effort to firm its positions on the international arena - a role many in the country see as more fitting of the world's second-biggest economy.
The NDB's launch follows another bright initiative spearheaded by China - the Asian Infrastructure Investment Bank
(AIIB), which was not supported by the U.S. and Japan, but was treated with favor by their allies including the United Kingdom, Germany and Australia.
