The biggest emerging economies opened their New Development Bank (NDB) in Shanghai on Tuesday.
The new bank will strengthen China’s ability to offer developing countries the support traditionally provided by the United States and Japan through organizations like the World Bank, Bloomberg reported.
The NDB — or BRICS bank, as it is known, after its sponsors Brazil, Russia, India, China and South Africa — will help in the recovery and development of emerging economies, China’s Finance Minister Lou Jiwei said at the opening ceremony.
It can promote cooperation among developing countries without undermining the roles of existing institutions like the World Bank, Lou said.
“NDB’s support for infrastructure construction will effectively ease the bottleneck that has constrained emerging and developing nations for long and will offer support for their economies’ upgrade and growth,” he said.
While the BRICS nations account for about a quarter of global economic output, they and their neighbors have long depended on loans from the US-led World Bank and the Japan-steered Asian Development Bank.
China has sought to build its own influence with its role in the NDB as well as leading the creation of the US$100 billion Asian Infrastructure Investment Bank.
The NDB will work with the AIIB, and a mutual hot-line will be set up, NDB president Kundapur Vaman Kamath said.
It is looking at local funding sources, such as financial and capital markets in the BRICS countries, he said.
The NDB will have initial capital of US$50 billion with plans to raise that to US$100 billion over time.
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