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Brazil, Russia, India, China, South Africa will move toward setting up a development bank during next week's summit to speed up the makeover of the world's "aging" financial infrastructure, a Kremlin envoy said.
Leaders of the so-called BRICS group of the world's biggest developing markets will discuss the size of the bank's starting capital, said Mikhail Margelov, President Vladimir Putin's envoy to Africa and head of the international affairs committee of the Russian parliament's upper chamber.
An agreement on the exact amount of resources to be committed isn't likely, and Russia favors capping each side's contribution to $10 billion at the start, he said in a March 15 interview at his office in Moscow.
"Better we start with something small and beautiful," said Margelov, who will join Putin at the March 26-27 summit in South Africa.
"Our strategic goal is to transform the aging international financial architecture."
Setting up a development bank by the BRICS group, which accounts for more than 40 percent of the world's population, is part of a push to win greater influence in international institutions to match its rising economic heft. The BRICS nations authorized a study into the feasibility of establishing a multilateral bank for funding projects in the developing world last year at their summit in New Delhi.
Goldman Sachs Group Inc.'s Jim O'Neill coined the BRIC term in 2001 to describe the four nations that he estimated would equal the U.S. in joint economic output by 2020. The BRIC nations held their first summit in 2009 and invited South Africa to join the group in December 2010.
BRICS Pact
A framework agreement that BRICS leaders plan to sign in Durban will outline a strategic interest shared by the five countries to invest in infrastructure, energy and telecommunication projects, Margelov said. Another accord may be signed on cooperation between the nations' stock exchanges to unify trading platforms and time standards, he said.
Last March, Brazil's Bovespa Index, Russia's Micex Index, the BSE India Sensitive Index, Hong Kong's Hang Seng Index, the Hang Seng China Enterprises Index and South Africa's JSE Top40 Index began trading futures based on each other's benchmark stock indexes.
The countries also plan to agree on creating a "virtual pool of reserves" to provide financial support in case of necessity, Margelov said. The stockpile will be in place until a BRICS bank is created, Margelov said.
In October Brazilian Finance Minister Guido Mantega said the pool will be modeled on the Chiang Mai Initiative for Japan, China, South Korea and 10 Southeast Asian nations. Those countries have $240 billion of emergency liquidity on tap to shield the region from global financial shocks after the funding was doubled last year.
