STRENGTHENING BRICS: INSTITUTIONAL AND FINANCIAL EVOLUTION
-By Ravishen Jain, Finance Intern, IISPPR
ABSTRACT
The BRICS has evolved its institutional and financial frameworks to enhance global economic stability. The New Development Bank, with over $30 billion in approved projects, and the $100 billion Contingent Reserve Arrangement exemplify the progress. Recent initiatives include expanding the NDB’s membership to countries like Egypt and promoting local currency trade to reduce U.S. dollar reliance. BRICS nations are also exploring a shared reserve currency to bolster financial independence. These developments signify a strengthened commitment to reshaping the global percentage of BRICS trade in local currencies to around 20% by 2025, with foreign exchange in cross-border claims rising to 15%. However, the dominance of the U.S. dollar remains a challenge.
NEW DEVELOPMENT BANK
The Evolution of the New Development Bank
The New Development Bank (NDB), established in 2014 by BRICS nations with an initial capital of $100 billion, addresses infrastructure and sustainable development needs in emerging economies. It has financed over $30 billion in projects, focusing on renewable energy, urban development, and transportation. The NDB serves as a vital alternative to Western financial institutions, promoting equitable growth.
Key Achievements and Progress
The NDB has funded transformative projects, including renewable energy in India, transport in Brazil, and urban infrastructure in South Africa. Its 2021 membership expansion to Bangladesh, UAE, and Uruguay highlights its global significance. By diversifying its portfolio, it continues fostering inclusive development across member states.
Recent Developments and Future Directions
In 2025, the NDB has further expanded with Egypt joining as a member, strengthening its global reach. It is prioritizing local currency lending to reduce reliance on the U.S. dollar and mitigate forex risks. These advancements position the NDB as a pivotal force in sustainable and resilient global financing.
CONTINGENT RESERVE ARRANGEMENT
Introduction to the Contingent Reserve Arrangement
The Contingent Reserve Arrangement (CRA), established in 2014 by BRICS nations, provides a $100 billion liquidity pool to address balance-of-payment crises. China contributes $41 billion, while India, Russia, and Brazil each provide $18 billion, and South Africa $5 billion. The CRA complements global institutions like the IMF, offering financial stability without strict conditionalities.
Achievements and Impact
Although no member has drawn from the CRA, it serves as a critical safeguard during global financial volatility. Its establishment boosted BRICS’ credibility, ensuring immediate liquidity support in times of economic stress. In 2025, the CRA remains a key financial instrument, reinforcing economic confidence among member nations.
Recent Developments and Future Directions
BRICS nations are enhancing the CRA’s operational framework to improve access and efficiency. Discussions in 2024 explored integrating digital financial tools and expanding its scope to include new BRICS members like Egypt. These efforts ensure the CRA adapts to evolving global financial challenges while strengthening its role as a stabilizing force.
TRADE IN LOCAL CURRENCIES
Introduction to Local Currency Trade
BRICS nations are advancing trade in local currencies to counter dollar dominance, support de-dollarization, and enhance economic sovereignty. Intra-BRICS trade exceeded $300 billion in 2021, with systems like Russia’s SPFS and India’s UPI enabling cross-border settlements. Recent developments include integrating digital currencies like India’s e-rupee and China’s digital yuan into trade frameworks. Bilateral currency swaps and reduced forex exposure further promote financial resilience. These initiatives reflect BRICS’ vision of a multipolar global economy driven by innovative financial systems.
Key Developments and Achievements
Efforts to establish payment systems like the Russian SPFS and India’s UPI for cross-border settlements have accelerated local currency usage. Brazil and China formalized a yuan-based trade agreement in 2023, reducing dollar dependency. In 2025, over 20% of intra-BRICS trade transactions are reportedly settled in local currencies, promoting financial resilience.
Recent Advancements and Future Plans
BRICS leaders in 2024 discussed a unified payment system and the potential creation of a reserve currency backed by gold or member currencies. Ongoing initiatives include integrating digital currencies like India’s e-rupee into cross-border trade. These strategies aim to expand local currency trade, strengthening financial independence in a multipolar economic order.
ADVANCING SOUTH-SOUTH COOPERATION
Introduction to South-South Cooperation
South-South Cooperation, a collaborative framework among developing nations, has significantly advanced through BRICS, fostering economic, technical, and cultural partnerships. Since its inception in 2009, BRICS countries have worked together to enhance trade, technology, and knowledge sharing. By 2024, intra-BRICS trade reached approximately $678 billion annually, reflecting a robust 10.7% annual growth rate over the past decade. The bloc’s recent expansion to include countries such as Egypt, Ethiopia, Iran, and the United Arab Emirates further exemplifies its dedication to broadening South-South Cooperation.
Key Achievements in South-South Cooperation
The BRICS New Development Bank (NDB) has approved over $30 billion in loans, focusing on infrastructure, technology, and climate resilience across the Global South. In 2024, it launched a fund for sustainable agriculture and water management in Africa and Asia. Partnerships with international organizations have enhanced co-financing for food security and rural development. Streamlined lending mechanisms now ensure faster support for low-income nations, reflecting BRICS’ commitment to resilient global growth.
Recent Developments and Future Outlook
In 2025, BRICS aims to increase its collective investment in South-South projects, focusing on digitalization and green technologies. Additionally, new partnerships with regional organizations like the African Union are set to expand the cooperative framework. These steps will solidify BRICS’ role as a pivotal player in advancing global development.
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