“The NDB will supplement the existing worldwide financial system in a healthy way and explore innovations in governance models”, Lou said at a seminar following the launch of the bank.
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The capital base will initially be used to finance infrastructure and sustainable development projects exclusively in the BRICS countries.
“NDB’s support for infrastructure construction will effectively ease the bottleneck that has constrained emerging and developing nations for (a long time) and will offer support for their economies’ upgrade and growth”, the minister said.
The “New Development Bank”, backed by the so-called emerging BRICS nations Brazil, Russia, India, China and South Africa, has been viewed as a challenge to Washington-based institutions.
The NDB will work with the AIIB, and a mutual hot-line will be set up, NDB president Kundapur Vaman Kamath said.
The NDB has initial capital of $50 billion, which will be expanded to $100 billion within the next couple of years.
Each BRICS member will contribute an equal share in establishing a startup capital.
Moscow – which has suffered huge currency fluctuations and struggled to attract investors since the outbreak of the crisis in Ukraine – sees the bank and a BRICS currency reserve pool as an alternative to global financial institutions such as the International Monetary Fund and World Bank, which are dominated by the United States.
The World Bank welcomed the opening of NDB.
The biggest contributor will be the world’s second largest economy China.
Also known as the Brics bank, it follows soon after the establishment of the China-led Asian Investment Infrastructure Bank (AIIB).
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The new bank will get $41bn from China, while Brazil, India and Russian Federation will each grant $18bn. “These types of partnerships will be essential to reach our common goals to end extreme poverty by 2030, boost shared prosperity, and to reduce inequalities”, Kim said.
