august 2014

More documents

Recommendations

Info

Point Out BRICS BANK BRICS, DEVELOPING THROUGH BANKING »» SURYA GANGADHARAN IMF, the World Bank and the countries and companies behind them, operate in a way “The that many petty drug dealers would recognize. They hook a victim with cheap goods and a lot of talk and later they up their demands. It’s not an endearing modus operandum – Roslyn Fuller, RT.com “The beginning of a new international economic order - Dingding Chen in The Diplomat. “If the post war order is being upended, The BRICS New Development Bank (NDB) is now a reality. It could start operations as early as next year from its headquarters in China’s business capital Shanghai with $50 bn in capital. the right answer is ‘hear hear’ - David Pilling in The Financial Times. The BRICS New Development Bank (NDB) is now a reality. It could start operations as early as next year from its headquarters in China’s business capital Shanghai with $50 bn in capital. That will rise to $100 bn with China contributing $41 bn, India, Russia and Brazil chipping in with $10 bn (rising gradually to $18 bn each) and South Africa contributing $15 bn. An Indian will be its first president. So what will the bank do? It will lend (initially only to its members) money for infrastructure projects to developing countries without setting political conditions. It promises to change the ethos of development finance irreversibly. Poor countries often lament the onerous conditions they have to subscribe to when taking loans from the World Bank or the IMF. The operations of the World Bank and IMF are opaque and critics say developing countries have little voice in the inner functioning of the institution. This the NDB promises to change. It’s also said that the IMF and other Western led lending systems give priority to credit repayment over providing basic social services. It’s a charge borne out of the huge debt that developing countries have accumulated. According to World Bank figures, the total debt of developing countries in 2010 was a mammoth $4 42 August <strong>2014</strong>
trillion. Early this year, the European Network on Debt and Development said developing countries face interest payments of almost $800 million a year on loans provided by Europe alone. At the launch of the NDB, Russia’s President Vladimir Putin spoke about the BRICS’s vision for the NDB: “The international monetary system … depends a lot on the US dollar, or, to be precise, on the monetary and financial policy of the US authorities. The BRICS countries want to change this.” The irony here is that the entire paid-in capital stock of the new bank is in US dollars. In contrast, just 10 percent of the World Bank’s paid-in capital is in American dollars; the rest being in the national currencies of member countries. There’s also the fact that China, India and Brazil have borrowed $66 billion – or more than the entire subscribed capital of the NDB – from the World Bank. One can expect this will change in the course of time but it is something to watch out for. Not that the NDB can take on the existing behemoths. The World Bank and IMF have been around for the last 70 years and unseating them will take many years and smart strategies. The World Bank has more than $200 bn of subscribed capital and with 188 members has operations all over the world. Its experience in funding projects is unrivalled and most important, it is able to think through issues and come up with ideas that become agendas. South African analyst Alex O’Riordan says: “In the international development space, there is no comparable institution able to attract the best talent, finance the biggest and most important studies and 43 able to disseminate its agenda as wide and deep as the World Bank.” A case in point is the recent World Bank decision that it will restrict funding for new coal plants in developing countries, deciding instead to invest in cleaner fuels. Financial analyst Samir Saran who is also vice-president of the Observer Research Foundation, says the NDB must create a business structure where borrowing countries are given greater urgency in prioritizing the projects they want funded. The bank’s operations must be transparent and there is a legitimate concern here that if China finds it is not able to dominate the bank, it may prefer to prioritize investments through its proposed Asian Infrastructure Investment Bank. He says it remains to be seen how soon the central banks of the NDB member countries devise measures to act as depository institutions for the NDB. How will the NDB raise funds in different countries, he asks? What will be the currency or currencies of choice? The concerns are valid but there’s no doubt the world financial institutions need to change. The New Development Bank doesn’t need to be fair, it doesn’t need to be perfect, it doesn’t even need to have that much cash to succeed. All it needs to do is be better than the IMF and World Bank. That will take time but is not impossible.
Page 1 and 2: pointoutnews.com august 2014 Vol-1
Page 3 and 4: Point Out cover story CHANGING FACE
Page 5 and 6: Point of View DIVIDE AND RULE F or
Page 8 and 9: Point Out MOM PITCHING FOR VARUN IN
Page 10 and 11: Point Out Point Out 10 August 2014
Page 12 and 13: Point Out COVER STORY CHANGING FACE
Page 14 and 15: Point Out COVER STORY CHANGING FACE
Page 16: Point Out COVER STORY CHANGING FACE
Page 19 and 20: Challenges Involved in Realizing th
Page 21 and 22: has had a higher purpose, that of c
Page 23 and 24: no one will tolerate violation of a
Page 25 and 26: RY GALLA GALLERY GALLARY GALLERY GA
Page 28: Point Out 28 August 2014
Page 32: Point Out 32 August 2014
Page 35 and 36: Impact Feature the exposition. The
Page 37 and 38: THE SILENT MAKE OVER IN BJP It was
Page 39 and 40: no visible dissent in the party as
Page 41: »» SURYA GANGADHARAN The most str
Page 45 and 46: Gandhi’s reputation. And while I
Page 47 and 48: Fuel economy is often cited as the
Page 49 and 50: The Galaxy Star Advance features a
Page 51 and 52: IN FOCUS PSUs SYNDICATE BANK CMD SK
Page 54 and 55: Point Out VILLAGE ROOTS PIPLANTRI :
Page 56: Point Out TAROT FORECAST »» Nandi
Page 59 and 60: Pro Kabaddi League will further adv
Page 61 and 62: 61 T O U C H I N G E V E R Y A S P
Page 63 and 64: PAYMENT OPTIONS - You can pay onlin
Page 65 and 66: AAMIR KHAN’S PK POSTER : ORIGINAL
Page 67 and 68: 67 touching every aspect of the nat

august 2014

Create successful ePaper yourself

Delete template?

Save as template?