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BRICS establish $100bn bank and currency reserves to cut out Western dominance

(L to R) Russia’s President Vladimir Putin, India’s Prime Minister Narendra Modi, Brazilian President Dilma Rousseff, China’s President Xi Jinping and South Africa’s President Jacob Zuma join their hands during the official photograph of the 6th BRICS summit in Fortaleza, Brazil, on July 15, 2014.




The group of emerging economies signed a long-anticipated document to create a $100 billion BRICS Development Bank called the Contingent Reserve Arrangement (CRA) and a reserve currency pool worth over another $100 bn.

The institution will counter the influence of Western lending firms as well as the dollar, and lessen dependence on the West and create a more multi-polar world, at least financially.

Russia, Brazil, India, China and South Africa account for 11 percent of global capital investment, and trade turnover almost doubled in the last 5 years.

BRICS represents 42 percent of the world’s population and roughly 20 percent of the world’s economy based on GDP, and 30 percent of the world’s GDP based on PPP, a more accurate reading of the real economy. Total trade between the countries is $6.14 trillion, or nearly 17 percent of the world’s total.

The new bank will provide money for infrastructure and development projects in BRICS countries, and unlike the IMF or World Bank, each nation has equal say, regardless of GDP size.

Membership may not just be limited to just BRICS nations, either. Future members could include countries in other emerging markets blocs, such as Mexico, Indonesia, or Argentina, once it sorts out its debt burden.

The group has already created the BRICS Stock Alliance an initiative to cross list derivatives to smooth the path for international investors interested in emerging markets. Documents on cooperation between BRICS export credit agencies and an agreement of cooperation on innovation were also inked.

Russia has also proposed the countries come together under an energy alliance that will include a fuel reserve, as well as an institute for energy policy. “We propose the establishment of the Energy Association of BRICS. Under this ‘umbrella’, a Fuel Reserve Bank and BRICS Energy Policy Institute could be set up,” Putin said.

Bringing emerging economies closer has become vital at a time when the world is guttered by the financial crisis and BRICS countries can’t remain above international problems, said Brazil’s President Dilma Rousseff. She cautioned the world not to see BRICS deals as a desire to dominate. “We want justice and equal rights,” she said.

BRICS establish $100bn bank and currency reserves to cut out Western dominance

ALBA

ALBA (formally, the Bolivarian Alliance for the Peoples of Our America – Peoples’ Trade Treaty (Spanish: Alianza Bolivariana para los Pueblos de Nuestra América – Tratado de los Comercios de los Pueblos) is an intergovernmental organization based on the idea of the social, political and economic integration of the countries of Latin America and the Caribbean, which was created as an alternative to the Free Trade Agreement of the Americas (FTAA).

The name initially contained “Alternative” instead of “Alliance”, but was changed on June 24, 2009. The name “Bolivarian” refers to the ideology of Simón Bolívar, the 19th-century South American independence leader born in Caracas who wanted the continent to unite as a single “Great Nation.”

Founded initially by Cuba and Venezuela in 2004, it is associated with socialist and social democratic governments wishing to consolidate regional economic integration based on a vision of social welfare, bartering and mutual economic aid.

The nine member countries are Antigua and Barbuda, Bolivia, Cuba, Dominica, Ecuador, Nicaragua, Saint Vincent and the Grenadines, Venezuela and Saint Lucia. Suriname was admitted to ALBA-TCP as a guest country at a February 2012 summit.

ALBA-TCP nations may conduct trade using a virtual regional currency known as the SUCRE, a regional currency to be used in commercial exchanges between members of the ALBA. Venezuela and Ecuador made the first bilateral trade deal using the Sucre, instead of the US dollar, on July 6, 2010.

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