Russian President Vladimir Putin (L) meets South Africa President Jacob Zuma before a meeting at the BRICS summit in Durban on March 26, 2013. (File photo)
The BRICS group of emerging economies has unveiled a new development bank, which is aimed at breaking the monopoly held by Western-backed institutions.
“It's done,” said Pravin Gordhan, South African Finance Minister, on Tuesday, adding that “we made very good progress” on the formation of a World Bank-analogue development agency.
Finance ministers of the BRICS countries - Brazil, Russia, India, China and South Africa - met in Durban, South Africa for the opening of the fifth BRICS summit this week as leaders are expected to make an official announcement on Wednesday.
"Not long ago we discussed the formation of a developmental bank...Today we are ready to launch it," said South African President Jacob Zuma on Monday.
The BRICS bank will present an alternative solution to the Western-dominated global banking system comprised of the Bretton Woods institutions - the World Bank (WB) and International Monetary Fund (IMF).
The new bank will provide a collective foreign exchange reserve and a fund for financing developmental projects in order to address the needs of emerging and poor economies.
Under the deal, the two largest economies of the emerging power groups, China and Brazil, agreed to remove nearly half of their trade exchanges out of the US dollar zone.
Each of the five BRICS nations will contribute up to 10 billion dollars in the launching of the development bank, which could take several years to be up and running.
The bank will operate on national currencies, rather than using a single currency and will be used in bilateral and multilateral trade deals.
BRICS members say the current global balance of power is unworkable, with institutions such as the WB, the IMF and the United Nations Security Council irrelevant in addressing matters concerning global economics.
BRICS countries make up over 40 percent of the world’s population and account for more than 25 percent of the global GDP.