BRICS Bank vs IMF and World Bank

Basics compared: IMF, World Bank, BRICS

Data	IMF	World Bank	BRICS Bank
By which summit?	Bretton Woods, USA		6th BRICS summit at Fortaleza, Brazil
Year	1944		2014, July. Although ops may by 2016.
HQ	Washington		Shanghai, China.
members	188	188 (IBRD); 172 (IDA)	only five
voting power	Different voting powers based on Quota system.	Differs according to shareholding and other criteria	All five members have equal voting power.
components	–	IBRD, IDA, IFC and MIGA	–
Purpose	Loans to solve Balance of Payment (BoP) crisis. technical assistance in policy making surveillance over International economy	Poverty reduction to 3% by 2030. Soft loans for development projects. Promoting foreign investment and international trade.	loans for infrastructure and sustainable development projects helping country in balance of payment  (BoP) crisis

How much money does BRICS bank have?

Initial subscribed capital	50 billion (each member gave 10 billion)
Initial authorized capital	100 billion
Contingency reserve arrangement (CRA)	100 billion

BRICS Contingency reserve

It is meant to help member nations fight against Balance of Payment crisis (possible because of Fed Tapering

Who gave how much to contingency fund?

China	41 billion
Brazil, India, Russia	18 billion each of them
S.Africa	5 billion.

Why BRICS Bank born?

1. BRICS nations have become as big economic power- collectively 1/5^th of World GDP and 2/5^th of world population. They want to solidify and demonstrate their strength with help of this “new development bank”.
2. BRICS nations are disenchanted with Bretton-Woods institutions viz World bank, IMF, GATT (which later became WTO).
3. Since their inception in 1944, the IMF and World Bank have not reformed their governance structure, to give more voting and voice to emerging economies. Both dominated by USA and developed countries. Both are out of sync with the new dynamics of world economy.
4. Will help defending these five economies from volatility in dollar exchange rate.
5. Will help financing high tech projects, infrastructure and sustainable Development in member nations.
6. Although IMF and World Bank provides loans but with various conditions imposed. BRICS nations want loan but without having to follow such dictates from the developed world.
7. In BRICS bank, the First chairman of the board of governors will be a Russian. First President of the bank will be an  Indian.  This is difficult in World bank and IMF given the lobbying and uneven voting power.
8. In the long run, it’ll make Chinese Yuan as an alternative to US Dollar- for global financial system. Then USA / West imposed ‘sanctions’ against any BRICS will become less effective.
9. RBI Governor Rajan- “we did not setup BRICS bank to challenge World bank and IMF. This bank is setup only to provide “patient money” to BRICS nations, because World Bank and IMF are taking too much time to reform themselves.”