BRICS to establish development bank, reserve arrangement

FORTALEZA, Brazil, July 15 -- The emerging-market bloc of BRICS on Tuesday announced plans to establish a development bank and a contingent reserve arrangement (CRA).

The five members of the group -- Brazil, Russia, India, China and South Africa -- laid out the designs of the New Development Bank (NDB) and the CRA in a declaration released following their sixth summit in this Brazilian city.

The NDB, to be headquartered in Shanghai, will have an initial authorized capital of 100 billion U.S. dollars, and its initial subscribed capital of 50 billion dollars will be equally shared among founding members, according to the Fortaleza Declaration.

The five countries decided that the first chair of the Board of Governors shall be from Russia, the first chair of the Board of Directors from Brazil, and the first president of the bank from India.

They also agreed to set up an African regional center of the NDB in South Africa, which will be established concurrently with the headquarters.

The bank, said the declaration, is aimed at "mobilizing resources for infrastructure and sustainable development projects in BRICS and other emerging and developing economies."

"Based on sound banking principles, the NDB will strengthen the cooperation among our countries and will supplement the efforts of multilateral and regional financial institutions for global development, thus contributing to our collective commitments for achieving the goal of strong, sustainable and balanced growth," said the document.

The CRA, with an initial size of 100 billion dollars, "will have a positive precautionary effect, help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements," it added.

In addition, the five countries also voiced their readiness to further facilitate trade, enhance financial ties, tackle tax-related challenges and tap the cooperation potential in insurance and reinsurance markets.

Chinese President Xi Jinping attended the summit along with Brazilian President Dilma Rousseff, Russian President Vladimir Putin, Indian Prime Minister Narendra Modi and South African President Jacob Zuma.