LEADERS of the BRICS emerging market nations are to meet today to launch a development bank and emergency reserves fund, an ambitious challenge to Western-run multilaterals that have shaped global finances since the end of World War II.

    Brazil, China, India, Russia and South Africa (BRICS) will sign off on the new institutions today after two years of tough negotiations, a major step for the diverse group known more for its anti-Western rhetoric than coordinated action.

    The BRICS will pool an initial US$50 billion in the bank, with each country contributing an equal amount, and seek to gain international clout by offering developing nations alternative financing to the World Bank and International Monetary Fund (IMF), long dominated by the United States and Europe.

    “This is symbolically important. It signals dissatisfaction of the BRICS countries with their position on the global economic stage,” said Charles Collyns, global economist with the Institute of International Finance, which represents the world’s major private banks and financial institutions.

    “The fact that they are able to get together and agree on setting up these institutions is an important symbol of their rising importance,” Collyns said.

    The bank will be called the New Development Bank, not the BRICS bank, which leaves the door open for other emerging nations such as Turkey, Mexico, Indonesia and Nigeria to join as partners at a later date.

    Many of the bank’s rules of operations, such as future investment in private projects, will be decided after its formal creation at this week’s summit in the Brazilian city of Fortaleza. The bank is expected to make its first loan in 2016.

    BRICS leaders will decide today which country will hold the first five-year presidency of the bank and whether it will be headquartered in Shanghai or New Delhi.

    Fears that China, whose economy is larger than that of all the other BRICS put together, could hijack the bank to serve its own interests have cast doubt on its future.

    “The BRICS don’t want to see a world in which China substitutes the United States as the global hegemon. Brazil and some of the others are very concerned with the rise of China,” said Oliver Stuenkel, a professor at the Getulio Vargas Foundation in Sao Paulo who has written extensively about the BRICS.

    The BRICS will also set up a US$100 billion contingency reserves pool, which could start operating by 2015 to help any of its members if they are hit by a sudden exodus of foreign capital.

    The BRICS group is at the forefront of a growing chorus of emerging and developed nations that complain the IMF and World Bank impose belt-tightening policies on them in exchange for loans while giving them little say in deciding the terms.(SD-Agencies)