The new development bank in global finance and economic architecture

Abstract

The article addresses the question whether the New Development Bank (NDB) will promote the role of the BRICS countries in the global financial architecture and foster their development. It begins by comparing the key multilateral development banks (World Bank, Asian Development Bank, African Development Bank and Inter-American Development Bank, European Bank for Reconstruction and Development) and national development banks of the BRICS countries with the newly established institution. The NDB's purpose is to mobilize resources for infrastructure and sustainable development projects in the member countries. This purpose, as author concludes on the base of the analysis, partly duplicates the work of the existing institutions. However, the NDB could add to the functions of the existing institutions and become a significant development bank for its members. The best way to achieve this significance is to implement multilateral projects in the areas mentioned above. The article also examines the current role of the BRICS countries in the global financial architecture and the potential for an increased role, brought by the establishment of the BRICS bank. The founding countries of the NDB will jointly determine the volume and directions of its financial aid. In addition, in contrast to the Bretton Woods institutions, the BRICS countries can change the rules of the development financial aid, particularly the conditions and system for monitoring results. The article concludes that the BRICS countries have created a possible way to change the current system of development finance and therefore to increase the role of the BRICS countries in the global financial architecture.