Macrobusiness blog in Australia has carried the full declaration released by the BRICS summit. It is interesting and even surprising to note that the BRICS leaders had reached an agreement on the BRICS bank, its share capital, location and management structure, etc. Predictable reaction from a Western news outlet.
I am not too enamoured of BRICS as an alternative to the discredited West because BRICS suffers from some of the same maladies that the West suffers from and some others too. Governance is captured by special interests and governments provide lip service to the common man and BRICS nations are not exactly committed to financial stability as opposed to favouring asset bubbles. So, BRICS as a group does not provide an alternative governance model. Uninspiring and morally and ethically inept and unsound leadership is a global phenomenon
Nevertheless, the new BRICS bank and the fund of contingent reserves are interesting and welcome developments from a geo-political perspective. Western dominance of multilateral institutions has to be resisted and pushed back. That is why BRICS’ warning on IMF governance reforms has not come a day too soon.
[Postscript: MINT has a detailed news-article on the BRICS bank. There is a concern that India might have ceded ground to China in allowing the location of the bank to be in Shanghai. I am not sure that it is a setback. Given China’s clout (even if its USD8.0trn GDP is overstated by about USD2.0trn), it is only natural that China got the HQ rights for the new institution. But, my first reaction is that it seems to be a good deal, for all the five countries. Put differently, I am happy to count the gains of the progress they have made on this matter than nit-pick]