The powerful blow has been dealt to the U.S. dollar hegemony in the global financial sector. The leaders of the BRICS countries signed a deal to create a new $100 billion development bank and emergency reserve fund. The BRICS bank will surely create competition for both the International Monetary Fund and the World Bank which are supervised by the U.S. The capital of the new bank equals $100 billion. $41 billion belongs to China. Russia, Brazil, and India will contribute $81 billion each. South Africa accounts for a “small” $5-billion stake. It should be noted that the BRICS nations have already called on the IMF to implement structural reforms, but these attempts have been neglected so far. Besides, the BRICS countries criticized the World Bank and the International Monetary Fund for not giving developing nations enough voting rights. In the communique, the BRICS leaders “express concern regarding the suspension of the IMF reform implementation and confirm the need to greenlight the 2010 IMF quota and governance structure reform as well as conduct the next overall quota review by January 2014 to ensure the Fund’s credibility, its legitimacy, and efficacy.” The communique also reads, “Reforms are supposed to update the governance structure and increase the role of developing nations and emerging markets in the global economy.” One of the goals for the BRICS bank is “to promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements.” Natalia Samoilova, a leading analyst at Golden Hills-Kapital, commented on the BRICS accord, “It is a political effort aimed to reinforce the role of the countries which are frequently disregarded by their U.S. and EU counterparts. The strong BRICS alliance will make it easier for its members to assert their interests.” Most experts believe that the creation of the development bank and emergency reserve fund will call the IMF legitimacy into question as well as undermine the U.S. influence abroad.
