The BRICS countries are a step closer to having a bigger say in the world’s financial system, after it announced the establishment of the BRICS New Development Bank. The BRICS economies have agreed to create the Contingent Reserve Arrangement, where each country’s central bank puts aside a designated amount of money to combat any potential liquidity crisis.
With a total reserve of 100 billion US dollars, China is the biggest contributor, with 41 billion US dollars. It’s followed by Russia, India and Brazil each with 18 billion US dollars, and South Africa, with five billion. The bank is designed to finance infrastructure projects in founding members of the BRICS countries and other emerging economies.
The establishment of the bank is the latest move by the BRICS countries, as it looks to take on greater importance in global trade and finance. The five countries combined account for about one-fifth of the world’s total GDP, having grown more than 300 percent over the last decade.