Leaders of the BRICS countries made history on Tuesday by creating a development bank called the New Development Bank as well as a $100 billion currency reserve pool.
This was announced on 15 July during the 6th BRICS (Brazil, Russia, India, China and South Africa) Summit in Brazil.
The new bank, according to media reports, will fund infrastructure projects in developing nations. It will be headquartered in Shanghai, China, and India will preside over its operations for the first six years, followed by five-year terms for Brazil and then Russia.
The bank will begin with a subscribed capital of US$50 billion divided equally between its five founders, even though China was initially in favour of a higher contribution for greater control.
The founding of a new bank is the first great achievement of the BRICS countries since the group was formed in 2009 to forge a new global financial order.
US$100 billion currency reserves pool
It was also announced that a US$100 billion currency reserves pool will be set up to help countries forestall short-term liquidity pressures. China, holder of the world's largest foreign exchange reserves, will contribute $41 billion while Brazil, India and Russia will put in $18 billion each and South Africa $5 billion.
The bank is scheduled to start lending in 2016 and be open to membership by other countries, but the capital share of the BRICS cannot drop below 55 percent, NDTV reports.