Following the Duma, or Russian Parliament, President Vladimir Putin has signed the ratification of a law that sanctions Russian participation in the $100 billion BRICS Bank on Monday.
The BRICS bank, Putin has said, “will become one of the largest multilateral financial development institutions in the world”.
“The bank and the Currency Pool, with combined resources of 200 billion dollars, lay the foundation for coordinating a macroeconomic policy between our nations,” Putin said during the 6th BRICS Summit in Brazil.
The BRICS Bank launched last year will fund infrastructure projects in Brazil, Russia, India, China and South Africa, and challenge the dominance of the Western-led World Bank and the IMF.
The Agreement will enter into force and the Bank will begin operations only after all member countries deposit their instruments of ratification with Brazil.
Central Banks of the member countries will also have to finalize an Inter-Central Bank Agreement containing the operational details of swap transactions and the Standing Committee’s Operational Procedures (SCOP) before the arrangement can be operational.
Russian Finance Minister Anton Siluanov is likely to become the bank’s first Chairman of the Board of Governors while India will nominate the first President of the BRICS Bank.
The first board meeting is supposed to take place in April in the Russian city of Ufa and the Bank is expected to start fully functioning by the end of 2015, according to the Russian Finance Ministry.
BRICS launched a $100 billion development bank and a currency reserve pool in July this year in their first concrete step toward reshaping the Western-dominated international financial system.
“The creation of the BRICS Development Bank and the Contingency Reserve Agreement (CRA) had been discussed for several years, and yet it still comes as a surprise to most Western analysts who consistently argued that the BRICS countries were too different from each other to ever agree on much,” writes Professor Oliver Stuenkel who teaches at the Getulio Vargas Foundation (FGV) in São Paulo, Brazil.
Each of the five-member countries is expected to allocate an equal share of the $50 billion startup capital that will be expanded to $100 billion.
The next BRICS Summit will be held in the Russian city of Ufa on July 9-10 this year.