The BRICS development bank is expected to start operations around the end of this year and play a complementary role to existing global financial mechanisms.
The bank, known as New Development Bank (NDB) and proposed in 2012, is backed by the five major emerging global economies -- Brazil, Russia, India, China and South Africa. NDB headquarters are on the site of the 2010 World Expo in Shanghai. Along with a 100 billion U.S.dollar contingent reserve arrangement to help countries forestall short-term liquidity pressure, the new bank is expected to strengthen the global financial safety net.
"The bank will have profound implications for infrastructure and sustainability in new markets and developing countries," said Shi Yaobin, China's vice Minister of Finance.
Shi said NDB would enhance international financing capabilities and facilitate world growth, especially developing countries.
The World Bank estimated that South Asia needs to invest about 250 billion U.S. dollars a year to bridge the infrastructure gap over the next 10 years, while East Asia needs about 600 billion U.S. dollars annually.
Developing countries have long complained that loans from organizations like the World Bank always come with strings attached and have campaigned for changes to these institutions.
"The NDB offers them a new financing channel and may spur other international financial institutions to do more to address the concerns of fast-growing economies," said Huang Jianhui, a senior researcher with China Minsheng Bank.
Meanwhile, NDB will soon welcome new member in addition to its founding members, according to Shi.
"An open stance, welcoming more countries, is expected to expand the influence of the NDB, as did the Asian Infrastructure Investment Bank (AIIB)," Huang said.
Shi pointed out that the NDB and AIIB are complementary and the two can work together with other international financial institutions to improve global economic governance.
The NDB will draw on the experience and established practices of other counterparts to become an efficient, professional and transparent organization, Shi said.
