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BRICS expected to announce new bank, new currency reserve fund

The leaders of Brazil, China, India, Russia and South Africa are preparing to meet in Brazil's Fortaleza for a summit of the world's largest emerging economies. The bloc is expected to announce the creation of a new development bank and a new currency reserve fund.  

MOSCOW: The leaders of Brazil, China, India, Russia and South Africa are preparing to meet in Brazil's Fortaleza for a summit of the world's largest emerging economies.

The BRICS countries, as they are collectively known, are expected to announce the creation of a new development bank and a new currency reserve fund. The new development bank is expected to provide financing for infrastructure projects.

Russian Finance Minister Anton Siluanov confirmed Russia's intention to contribute the equivalent of US$2 billion to the bank's reserves over the next seven years.

Starting with US$10 billion in cash and US$40 billion in guarantees, the new bank's reserves are expected to rise to US$100 billion.

The leaders will also agree to establish a US$100-billion fund to stabilise the currency markets of any BRICS member state experiencing a financial crisis.

On the eve of the summit in Brazil, Russia's presidential aide on foreign policy Yuri Ushakov said that the bloc's growth rate is above the global average and that its political and economic weight is increasing - an opinion shared by many observers in Moscow.

Dmitry Polevoi, chief economist (Russia and CIS) at ING Bank Moscow, said: “Currently investors have more concerns about the sustainability, the growth sustainability in emerging markets including the BRICS countries. So therefore the shared experience or ideas of how to handle these structural challenges in the economies is also a positive thing, not only for the BRICS economies but also the global economy, given the rising contribution from emerging markets."

The BRICS summit however, is not just concerned with its internal dynamics.

Ushakov declared that Moscow also expects the leaders of the BRICS nations to discuss international issues, including the situation in Ukraine.

All BRICS members except for Russia abstained from a United Nations vote that called on states not to recognise Crimea's autonomy from Ukraine, which Russia annexed in March. 

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