BRICS countries challenge IMF, World Bank

The long awaited event has happened.

Five developing countries, Brazil, Russia, India, China and South Africa, also called BRICS have challenged the IMF and World Bank.

At the annual summit at Brazil’s Fortaleza city, the BRICS countries stated they have founded a multilateral development bank.

The shortly named the New Development Bank’s (NDB) capital is $50 billion for now.

The NDB will be financing infrastructure projects that come from developing countries. The first president will be from India, while Brazil and Russia will be responsible for choosing the senior directors.

The headquarters of the bank will be located in Shanghai, China. BRICS countries also took a step toward establishing a reserve currency fund worth $100 billion to evade any potential move coming from the Federal Reserve Bank.The country that contributed most to the fund is China with $41 billion.

According to economists, BRICS are sending a very clear message to the west, especially to the U.S. that:

“Despite of our strong stance in the global economy we do not have enough right of speech in the eyes of the IMF and the World Bank; therefore, we will establish a new global finance system.”

But will this new undertaking by the BRICS countries, whose leaders posed happily together for the cameras after the announcement of the establishment, be successful?

There are economists who have skeptical approaches toward the new initiative and there are ones that are looking at it with hope. The skeptics’ reasons are very different. According to some, different views, growth rates, political establishments and population structures might block the way of BRICS countries on reaching a...