Both politics and economics behind proposed BRICS bank

The document examines the BRICS contingent reserve arrangement (CRA), a US$100bn pool designed to provide liquidity during balance of payments or short-term liquidity crises. While the CRA serves as a political challenge to the perceived undemocratic structure of the International Monetary Fund (IMF), it also provides an 'Argentinian floor' to prevent total currency collapse during market volatility, such as that caused by US Federal Reserve tapering.

• The contingent reserve arrangement (CRA) is a US$100bn common pool of pledged funds intended to assist BRICS nations during balance of payments crises or short-term liquidity crises. China is the largest contributor at US$41bn, followed by Brazil, Russia, and India at US$18bn each, and South Africa at US$5bn.
• The CRA is driven by a political desire to challenge the International Monetary Fund (IMF), which BRICS members criticize for its conservative economics, harsh loan conditions, and undemocratic internal structure. The arrangement emerged because IMF reforms have been stalled for five years in the US Congress.
• Despite its political symbolism, the CRA is not a replacement for the IMF, as the IMF's resources of $850bn are approximately 8.5 times larger than those of the CRA.
• The primary economic value of the CRA is providing an "Argentinian floor," which signals to investors that shocks will not lead to an all-out crisis, similar to the severe devaluation of the Argentine peso.

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} }