The New Development Bank: Another BRICS in the Wall?

This article analyses the New Development Bank (NDB), the financial institution established through the inter-governmental agreements reached during the sixth Summit of BRICS countries held in Fortaleza, Brazil, on July 15th 2014, where the five main emerging economies were represented (Brazil, Russia, India, China, South Africa). These countries aim to become an alternative to the western Group of Seven (G7); indeed, the reasons underlying the creation of the NDB are strictly linked with the IMF’s reforms and the lack of a strong acknowledgment of the rising importance of these economies in the Bretton Woods institutions. The NDB has the primary goal to finance infrastructural projects in the BRICS and in the developing countries and it can rely on a strategic fund of reserve capitals in order to cope with possible currency crises and with the short-term liquidity crises (Contingent Currency Pool), and to guarantee a prompt allocation, by BRICS Central Banks, of US denominated liquidity in cases of shortage. The Bank could be in the next years an important tool to foster investments on large development projects and to strengthen the economic and trade ties among the signatory countries. Notwithstanding,thegovernance frameworkofthis new Bankseems toreplicatesomeofthe shortcomings still existing in the IMF and WB: time will tell if the NDB can assert itself as a real alternative to the Bretton Woods institutions, correcting the transparency and democratic deficit, or if it will replicate the same framework, beyond the different composition ratione personarum in the Bank management.