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Latin American Economy & Business - August 2014 (ISSN 1741-7430)

Region: A better deal from the new Development Bank?

At their sixth annual summit meeting, held in Fortaleza, Brazil in July, the heads of state of the five BRICS nations (Brazil, Russia, India, China and South Africa) took the potentially momentous decision to create a New Development Bank (NDB), which eventually should have US$100bn in capital backing, and agreed to set up a Contingent Reserve Arrangement (CRA) between them, also worth US$100bn. Some have seen these two steps as a political response to the limitations of the Bretton Woods Agreement (coincidentally, reached almost exactly 70 years earlier in July 1944), which created the two pillars of the international financial system, the World Bank (WB) and the International Monetary Fund (IMF). Does this BRICS initiative offer a better deal to Latin America’s developing economies, and an answer to the long-standing critics of WB-IMF conditionality?

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