The leaders of the five BRICS nations have signed a deal to launch a 100-billion U.S. dollar development bank and a currency reserve pool, with the aim of challenging Western-dominated institutions like the World Bank and the International Monetary Fund.
"This will not only help increase the voice of BRICS nations in terms of international finance, but more importantly, will bring benefits to all the people in the BRICS countries and for all people in developing countries."
The New Development Bank, announced at the sixth BRICS summit in Fortaleza, Brazil on Tuesday, will fund infrastructure projects in the founding members -- Brazil, Russia, India, China and South Africa -- as well as other developing nations.
With its headquarters in Shanghai, and India as president the first year, the bank will start out with 50-billion dollars in capital with each BRICS country paying in an equal amount.
Total capital is expected to eventually double to 100-billion dollars.
A so-called Contingent Reserve Arrangement will also be created where each country will put in a designated amount in case of a currency crisis.
The contingency fund will amount to 100-billion dollars with China contributing 41-billion, followed by Brazil, Russia, and India putting in 18-billion each and South Africa chipping in 5 billion.
BRICS represents about 42-percent of the world's population and accounts for roughly one-fifth of the world economy.
The launch of the institution is being seen as a landmark achievement as the five countries started summit talks in 2009 to counter the influence of the West.
If everything goes according to plan, the New Development Bank will start lending in 2016.
Connie Kim, Arirang News.