by Tyler Durden
July 15, 2014
from
ZeroHedge Website
As we
suggested last night, the anti-dollar alliance among the BRICS has
successfully created a so-called "mini-IMF" since the BRICS are clearly
furious with the IMF as it stands currently.
This is what the world's
developing nations just said on this topic,
"We remain disappointed and
seriously concerned with the current non-implementation of the 2010
International Monetary Fund (IMF) reforms, which negatively impacts on the
IMF’s legitimacy, credibility and effectiveness."
As Vladimir Putin explains, this is part of,
"a system of measures that would help
prevent the harassment of countries that do not agree with some foreign
policy decisions made by the United States and their allies."
Initial
capital for the BRICS Bank will be $50 Billion - paid in equal share among
the 5 members (with a contingent reserve up to $100 Billion) and will see
India as the first President.
The BRICS Bank will be based in Shanghai and
chaired by Russia.
Simply put, as Sovereign Man's Simon Black warns,
"when
you see this happen, you’ll know it’s game over for the dollar... I give it
2-3 years."
A quick take on existing monetary policy.
The punch-line, however, is that using bilateral swaps, the BRICS are
effectively disintermediating themselves
from a FED and
other "developed
world" central-bank dominated world and will provide their own funding.
We are pleased to announce the signing of the Treaty for the establishment
of the BRICS Contingent Reserve Arrangement (CRA) with an initial size of
US$ 100 billion.
This arrangement will have a positive precautionary effect,
help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement
existing international arrangements...
The Agreement is a framework for the
provision of liquidity through currency swaps in response to actual or
potential short-term balance of payments pressures.
Incidentally, the role of the dollar in such a world is, well,
nil.
For those who have forgotten who
the BRICS are, aside from a droll acronym
by a former Goldman banker, here is a reminder of the countries that make up
3 billion in population.
Key excerpts from
the Full statement:
We remain disappointed and seriously concerned with the current
non-implementation of the 2010 International Monetary Fund (IMF) reforms,
which negatively impacts on the IMF’s legitimacy, credibility and
effectiveness.
The IMF reform process is based on high-level commitments,
which already strengthened the Fund's resources and must also lead to the
modernization of its governance structure so as to better reflect the
increasing weight of EMDCs in the world economy. The Fund must remain a
quota-based institution.
We call on the membership of the IMF to find ways
to implement the 14th General Review of Quotas without further delay. We
reiterate our call on the IMF to develop options to move ahead with its
reform process, with a view to ensuring increased voice and representation
of EMDCs, in case the 2010 reforms are not entered into force by the end of
the year.
We also call on the membership of the IMF to reach a final
agreement on a new quota formula together with the 15th General Review of
Quotas so as not to further jeopardize the postponed deadline of January
2015.
BRICS, as well as other EMDCs, continue to face significant financing
constraints to address infrastructure gaps and sustainable development
needs.
With this in mind, we are pleased to announce the signing of the
Agreement establishing the New Development Bank (NDB), with the purpose of
mobilizing resources for infrastructure and sustainable development projects
in BRICS and other emerging and developing economies.
We appreciate the work
undertaken by our Finance Ministers. Based on sound banking principles, the NDB will strengthen the cooperation among our countries and will supplement
the efforts of multilateral and regional financial institutions for global
development, thus contributing to our collective commitments for achieving
the goal of strong, sustainable and balanced growth.
The Bank shall have an initial authorized capital of US$ 100 billion.
The
initial subscribed capital shall be of US$ 50 billion, equally shared among
founding members. The first chair of the Board of Governors shall be from
Russia. The first chair of the Board of Directors shall be from Brazil. The
first President of the Bank shall be from India. The headquarters of the
Bank shall be located in Shanghai.
The New Development Bank Africa Regional
Center shall be established in South Africa concurrently with the
headquarters. We direct our Finance Ministers to work out the modalities for
its operationalization.
We are pleased to announce the signing of the Treaty for the establishment
of the BRICS Contingent Reserve Arrangement (CRA) with an initial size of
US$ 100 billion.
This arrangement will have a positive precautionary effect,
help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement
existing international arrangements. We appreciate the work undertaken by
our Finance Ministers and Central Bank Governors.
The Agreement is a
framework for the provision of liquidity through currency swaps in response
to actual or potential short-term balance of payments pressures.
Goodbye visions of an SDR-world currency.
As for the USD...
Video:
