BRICS Exploring Emerging Nations' Alternative To IMF, WB

New Delhi, Mar 13, IRNA -- BRICS group of nations are exploring possibility of establishing a South-South Development Bank as emerging economies' alternative to existing West-led financial institutions, and will hold a meeting in New Delhi next week to discuss its feasibility. External Affairs Minister S. M. Krishna has said an experts' meeting would be held in the Indian capital on March 19 as China and India, in association with Brazil, Russia, and South Africa, have taken the initiative to discuss such a bank as a BRICS-led project. The idea is being discussed at a time when emerging nations are pushing for greater say and quotas in the economic affairs of Bretton Woods institutions like the World Bank and IMF, over which Europe and the US have a traditional hegemony. They are also demanding an end to the unwritten understanding between Europe and the US, under which the World Bank always has an American head while the IMF is always led by a European. According to pti, Krishna was cited as saying by Singapore's Institute of South Asian Studies (ISAS) in a report that the BRICS-led project would help supplement efforts of other multilateral institutions in meeting investment requirements of BRICS and other developing countries. Krishna said some of the BRICS economies as well as other emerging economies have a large savings base, part of which is not utilised domestically. 'This leads to movement of savings to advanced countries by way of foreign exchange reserve investments in treasury and other highly-rated instruments in advanced economies,' he said. A South-South development bank was being envisioned as a mechanism to foster South-South Investment and help recycle such surplus savings for the developing countries' own development needs. India would host a BRICS summit this year. 'At the G-20 Summit in Seoul, our Prime Minister had also mooted the idea of recycling surplus savings into investment in developing countries to address not only immediate demand imbalance, but also to help address developmental imbalances. 'BRICS is considering if the idea of a BRICS-led South-South Development Bank can be taken forward in a sustained manner,' Krishna was quoted as saying. Krishna said Prof Joseph Stiglitz and Nicholas Stern's paper, 'International Development Bank for Fostering South-South Investment on setting up a South-South development bank' had suggested a financial intermediation system for recycling savings from emerging economies for meeting their investment requirements, and that a South-South development bank would be most appropriate for such an intermediary role. He said other regional institutions like the Asian Development Bank, the African Development Bank and the European Bank for Reconstruction and Development are already complimenting efforts of global multilateral institutions like the World Bank. The setting up of a BRICS-led South-South bank, therefore, would not be an 'aberration' to the global financial architecture, and would 'supplement' the efforts of other multilateral institutions in meeting the investment requirement of BRICS and other developing countries./end