![]() Meanwhile, in India, the BRICS Bank has been deemed by some as damaging to the recently elected Indian Prime Minister Narendra Modi’s reputation due to his failure to secure India as home to the new BRICS Bank headquarters which was ultimately conceded to China (the largest financial contributor to the BRICS bank), a point articulated in a Financial Times guest post by Manjeet Kripalani, the executive director of the Mumbai-based Indian Council on Global Relations. Senate also voted down IMF voting reforms as part of the aid package). Many have argued that the $17 billion IMF aid package for the Ukraine, approved earlier this year, further incentivized the Russian government’s willingness to move forward with creating the BRICS Bank (the U.S. Of course, this mess includes the recent Russian-Ukrainian conflict. ![]() Jim O’Neill, the economist who coined the term “BRIC” and a former colleague of mine at Goldman Sachs Asset Management, believes that the BRICS Bank is really “a permanent sign that global governance is a mess”. Briqs bank tv#Photo Credit: Screenshot via Business Insider/ Bloomberg TV Jim O’Neill: BRICS Bank “a permanent sign that global governance is a mess” Ultimately, Christine Lagarde, the French Finance Minister, was elected to the post.įailure to elect a non-European IMF director and the continued political uncertainty around increased BRIC IMF voting power ultimately are what gave way to the formation of the BRICS Bank, which in effect will act as an alternative lending facility to the IMF. In 2011, the BRIC countries also complained that the IMF should seek to elect a non-European Managing Director (the IMF has been continuously run by a European since its creation in 1946). voting power to roughly 16.5%, still enough voting power to veto any future IMF proposals that require a supermajority. Interestingly, the proposed reforms would only dilute the U.S. (which holds 17% of the IMF's voting power) is required to fulfill a 85% supermajority needed for such IMF reforms. Reforms to give more voting power to emerging economies like the BRICS were agreed by the G20 in 2010, however Congress has yet to approve these reforms. As a result, the BRIC countries carry a disproportionately low amount of voting power in the IMF. ![]() However, these quotas have not been revised for many years while the contribution to global GDP from the emerging BRIC economies has grown dramatically (China’s voting power currently sits at 5% while it now makes up roughly 10% of global GDP). This quota also determines each member country’s voting power. Based on a quota system, each member country is assigned a quota, or monetary contribution, that is supposed to reflect the country’s relative size in the global economy as measured by GDP. Division of voting power at the IMF, going on 70 years, is very much a political subject. ![]()
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