The BRICS have created the Shanghai Based development fund called National Development Bank (NBD) as an alternative to western led financial institutions. In the past the developing countries and also the member countries of IMF have faced financial crises and were not able to repay the loan borrowed by IMF due to unfavorable borrowing terms. After default in repayment IMF have started to control the major infrastructure projects of defaulting nations the biggest example is Africa rich in resources but still an economy below the mark. IMF is majorly influenced by the United States of America since it holds the major voting power about 18%.
The establishment of NBD by BRICS marks the delayed shift of power from west to east and developing economies. Today BRICS account for 25% of world's GDP, 35% of international trade, 25% of land area and 42% of worlds population. Imagine the independency of BRICS on IMF with such statistics.
The emergence of new BRICS bank is the first building block and a greater voice of new economic and financial powers of 21st century. The next global agreement will be Shanghai and not Bretton Woods. The second building block will be creation of 'Yuan zone' which is Chinese policy of increasing the internationalization of Renmimbi and minimizing Dollar dependency. Renmimbi will soon emerge as global currency alongside Dollar and Euro. The third building block will be development of debt markets pegged to Renmimbi. Renmimbi will soon dominate the Asian financial markets and will be added for Special drawing rights in IMF basket of currencies.
Chinese will hugely benefit by formation of NBD since it is major export hub with large bilateral trade agreements whereas Indian will be second beneficiary since it confirms the presidential seat for NBD.
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