Both politics and economics behind proposed BRICS bank

This research paper analyzes the Contingent Reserve Arrangement (CRA) and the New Development Bank, focusing on the economic and political motivations of the BRICS nations in creating these institutions as alternatives to the International Monetary Fund (IMF).

• The Contingent Reserve Arrangement (CRA) is a mutual pledge by five countries to provide a total of US$100bn to assist members during financial crises, specifically balance of payments crises or short-term liquidity crises. The contributions are weighted, with China providing the most at US$41bn, Brazil, Russia, and India providing US$18bn each, and South Africa providing US$5bn.
• The CRA serves as a political counterpoint to the International Monetary Fund (IMF), driven by BRICS members' dissatisfaction with the IMF's undemocratic internal structure, conservative economic approach, and loan conditions. The creation of the CRA is partly a response to the US Congress blocking IMF reforms for five years.
• While the IMF remains significantly larger in total resources (US$850bn compared to the CRA's US$100bn), the CRA is approximately 1.8 times larger than the IMF when weighted for the size of their respective member economies.
• The primary economic value of the CRA is providing an "Argentinian floor" to prevent total currency collapse during shocks, such as the instability caused by the US Federal Reserve's tapering of monetary stimulus. This acts as a protective barrier to reassure investors, even though some critics argue that drawing on the CRA could signal a crisis to global markets.

APA

South African Institute of International Affairs (2014). Both politics and economics behind proposed BRICS bank. https://saiia.org.za/research/both-politics-and-economics-behind-proposed-brics-bank/

Chicago

South African Institute of International Affairs. Both politics and economics behind proposed BRICS bank. 2014. https://saiia.org.za/research/both-politics-and-economics-behind-proposed-brics-bank/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=Both politics and economics behind proposed BRICS bank |date=15 July 2014 |url=https://saiia.org.za/research/both-politics-and-economics-behind-proposed-brics-bank/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2014both, author = {{South African Institute of International Affairs}}, title = {{Both politics and economics behind proposed BRICS bank}}, institution = {South African Institute of International Affairs}, year = {2014}, month = jul, url = {https://saiia.org.za/research/both-politics-and-economics-behind-proposed-brics-bank/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }