from our Advisory Board member ,Frank Bracho, Venezuela’s former ambassador to India
Incubating a non-dollar architecture
The launch of the BRICS bank can now give the member countries confidence to experiment with other geoeconomic ambitions. Incubating a non-dollar financial architecture can be the next goal. There are existing models to build upon but India will need smart economic diplomacy to secure its interests
After two years of intense negotiation, the BRICS leaders finally launched the New Development Bank on July 15 at the Sixth BRICS Summit in Fortaleza, Brazil. The bank’s focus will be on infrastructure and sustainable development projects through loans, guarantees, credits and equity investments. The decision to share the initial subscribed capital of $50 billion and the resulting voting rights equally, reflects a commitment by the five countries to view each other with equity.
The launch of the bank will now give the BRICS five confidence to experiment with other geoeconomic ambitions. Chief among them is the desire to conduct trade in local currencies. Russia is moving to denominate its energy assets in roubles, China is pushing for the renminbi to become the global currency of choice for trade payments, and India was creatively using rupee accounts to hold payments for Iran after the U.S. and EU imposed financial sanctions on Iran.