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Zhu Guangyao: BRICS bank will not replace World Bank

08/11  12:32

"The New Development Bank (NDB) of the BRICS countries is an important supplement and improvement to the current global financial system, and the World Bank in particular. The NDB is definitely not a substitute for the World Bank," Zhu Guangyao, China's vice finance minister said at the BRICS Economic Think Tank Forum Thursday in Beijing.

The NDB is a multilateral development bank operated by the BRICS states (Brazil, Russia, India, China and South Africa) to foster greater financial and development cooperation among the five emerging economies, which are characterized by their large size, rapid growth rate, huge market potential, high savings rate and large investment demand.

Top leaders from the BRICS countries signed a document to establish the long-anticipated NDB at the sixth BRICS summit held in Fortaleza, Brazil, on July 15, 2014. Headquartered in Shanghai, the new BRICS Bank, with US$50 billion in initial capital, will finance infrastructure and sustainable development projects. A US$100 billion Contingency Reserve Arrangement was also agreed at the summit, to provide assistance to members in financial difficulty.

"The BRICS states valued economic growth highly, especially infrastructure construction. The establishment of the NDB has shown our solidarity," Zhu said. "We support the current global financial institutions and pay our obligations to the World Bank and regional development banks. In order to promote infrastructure development, we should enhance cooperation and coordination with the World Bank," Zhu added.

The five member states have equal shares in the bank, 20 percent each. "This has shown the principle of fairness of the NDB. It's an innovation of global financial governance and supervision and represents the democratization of international financial relationships. This practice needs to be preserved and popularized," Zhu said.

"The NDB will be an active architect in the international financial architecture," said Zheng Zhijie, president of China Development Bank. As of 2014, the BRICS countries account for 20 percent of world GDP and 40 percent of the global population. They are an important force to promote the balance of world economic development. "Established by the BRICS states, the NDB is not only a contributor to the common interests of developing countries, but also a partner in reshaping the global financial structure," Zheng added.

China has started preparations for its first NDB program. "We have held discussions on the program. It's important for us to make sure the program is successful in order to show the NDB's professionalism and its high standards in selection, operation and supervision," Zhu said.

The preparations for the NDB headquarters building in Shanghai have already started, said Tu Guangshao, executive vice mayor of Shanghai. The Shanghai municipal government has set up a special working group on this issue. "The NDB headquarters will establish a new platform for cooperation between Shanghai and the international economic institutions. It will further promote the industrial restructuring and financial internationalization of Shanghai," Tu added.

With the theme of "cooperation among BRICS countries to reform the international financial architecture", the BRICS Economic Think Tank Forum has attracted more than a hundred top-level economists from home and abroad. The BRICS Economic Think Tank was formally launched at the forum and released its first report on the prospects of BRICS cooperation and policy suggestions to transform the BRICS from a concept into a substantial body.