The BRICS Development Bank: A New Tool for South-South Cooperation?

The Sixth BRICS Summit, held in July 2014 in Fortaleza, Brazil, resulted in agreements to establish a New Development Bank (NDB) as well as a Contingent Reserve Arrangement (CRA). This Policy Brief discusses the impact of the NDB on the existing architecture of de-velopment finance, focusing on the bank’s potential contribution to the BRICS’ South-South cooperation. The first section outlines the BRICS countries’ rational for establishing the NDB. In the following section potential development paradigms that are likely to be adopted by the NDB are addressed. Since no decision has been taken on the bank’s future governance, this section will be based on the experiences from the BRICS’ national development banks. Once the NDB’s governance is agreed upon, it will impact whether and to what extent the new bank will cooperate with the existing international system of development finance. A third section discusses the NDB’s potential appeal for the Global South. The Global South shares with the BRICS a disappointment with the existing system, and connects specific hopes and expecta-tions with the foundation of the NDB. Examining the Banks effect on South-South cooperation, the section includes prospects on the Bank’s capital potential and by that its potential contribution to the prevalent demand for infrastructure financing in developing coun-tries. A final section summarises the points made and aims to put the present perceptions of the NDB in rather cautious perspectives.

Available only in English.