BRICS Reserve Fund is Enlarging

• 05.06.2015, 09:43
•  World

BRICS strengthens its economic capabilities. It plans to set up $100 billion reserve fund. The fund is addressed to emergency situations that can happen in BRICS economies. The accord on the creation of a common reserve fund for BRICS countries has been ratified by the Russian President Valdimir Putin in Kremlin on weekend, RIA Novosti news agency reports.

The agreement was signed in Brazil on last July. The aim of a common fund is  to protect the member countries’ currencies against volatility in the global markets. It is also a way that BRICS countries will not depend on the West dominated international financial institutions such as World Bank and International Monetary Fund. The BRICS fund would provide adequate liquidity for Russia and for the rest of the members. Each member of BRICS is going to have its own contribution to the fund. Moscow is expected to contribute $18 billion to the reserve, China’s contribution will be $41 billion, Brazil and India will also donate $18 billion each and South Africa’s share will be $5 billion. BRICS is also setting up $100 billion New Development Bank. The Bank will compete with World Bank, IMF and other international financing systems.

BRICS makes up 40% of the world’s population and about 20% of the world’s economic activities. These numbers can create quality and make changes in global economy. BRICS member China also in its turn has created Asian Infrastructure Investment Bank and some European countries such as Brittan and Germany are holding membership with the Bank.

Although IMF Director Christian Lagard does not see BRICS as a rival for IMF, BRICS has capacity to be stiff competitor for the Institution. The IMF’s total reserves are about $1 trillion, according to the Director BRICS reserve fund can be as complimentary to the IMF.