New Development Bank
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| New Development Bank | |
|---|---|
 Donnie28 · CC BY-SA 4.0 · source | |
| Name | New Development Bank |
| Established | 2014 |
| Headquarters | Shanghai |
| Members | BRICS members (and others) |
| President | Banco de Desenvolvimento |
| Website | N/A |
New Development Bank is an international multilateral financial institution established by leaders of the BRICS countries to mobilize resources for infrastructure and sustainable development projects in emerging economies and developing countries. It was launched at the 6th BRICS Summit in Fortaleza and later formalized at the 7th BRICS Summit; its creation followed discussions at the G20 and engagements among finance ministers from Brazil, Russia, India, China, and South Africa. The institution operates alongside existing entities such as the World Bank, the International Monetary Fund, the Asian Infrastructure Investment Bank, and the European Investment Bank while engaging with regional bodies like the African Union and the Association of Southeast Asian Nations.
History
The conceptual roots trace to high-level meetings among the heads of state at the 2012 BRICS Summit and the 2013 BRICS Summit where leaders referenced cooperation frameworks including the Moscow Mechanism and proposals discussed at the BRICS Sherpas meetings. Formal agreements were made at the 6th BRICS Summit in Fortaleza and operational launch occurred after signing documents in 2014 BRICS Summit sessions. Early organizational steps involved consultations with officials from the G20 Finance Ministers Meeting, the World Bank's interim staff, and advisers with prior experience at the Inter-American Development Bank and the Asian Development Bank. The bank established its headquarters in Shanghai after deliberations that involved comparative proposals from Johannesburg, New Delhi, Brasília, and Moscow. Subsequent governance reforms and membership expansion were discussed at summits such as the 2015 BRICS Summit and the 2017 BRICS Summit, influenced by precedent from the Bretton Woods Conference institutional architecture and borrowing practices observed at the European Bank for Reconstruction and Development.
Membership and Governance
Founding members included representatives from Brazil, Russia, India, China, and South Africa after agreements at the BRICS Summit (2014). Prospective new members and non-regional applicants have been evaluated using criteria similar to accession practices in the World Trade Organization and the International Finance Corporation. The bank’s governance structure features a Board of Governors that convenes similarly to the boards of the International Monetary Fund and the World Bank Group and a Board of Directors modeled on mechanisms used by the Asian Infrastructure Investment Bank and the European Investment Bank. Senior leadership appointments have been compared to those at the African Development Bank and the Islamic Development Bank, including rotational presidency discussions reflecting diplomatic practices observed at the United Nations General Assembly and plenary procedures from the Shanghai Cooperation Organisation.
Capital, Funding and Financial Instruments
Initial subscribed capital was agreed among founding states during sessions comparable to deliberations at the G20 Summit and allocations reminiscent of capital commitments at the Asian Development Bank. The bank leverages paid-in capital and callable capital in a structure akin to the International Monetary Fund and the European Bank for Reconstruction and Development. It raises funds through bond issuances in international markets similar to practices by the World Bank and the Inter-American Development Bank and has issued currency-denominated instruments comparable to those used by the Asian Infrastructure Investment Bank and sovereign issuers like Brazilian Development Bank instruments. Financial instruments include sovereign and non-sovereign loans, guarantees, lines of credit, and co-financing arrangements with entities such as the Green Climate Fund and bilateral development agencies like Japan International Cooperation Agency and Agence Française de Développement.
Operations and Project Portfolio
Operationally, the bank finances infrastructure projects, urban development initiatives, renewable energy facilities, and transport corridors, mirroring portfolios seen at the European Investment Bank and the Asian Development Bank. Project examples include financing for renewable energy projects similar to those supported by the Global Environment Facility and urban transit programs akin to projects funded by the Inter-American Development Bank. Co-financing arrangements have been struck with multilateral partners including the World Bank Group, the Asian Infrastructure Investment Bank, and regional institutions like the African Development Bank to leverage syndicated loans and blended finance approaches used by the International Finance Corporation. Project appraisal, procurement, and implementation practices draw comparisons with standards applied by the European Bank for Reconstruction and Development and the Asian Development Bank.
Policy, Standards and Partnerships
The institution has developed environmental and social policies that reference international norms present in documents from the Equator Principles, the United Nations Environment Programme, and standards used by the World Bank and International Finance Corporation. Partnerships include memoranda and co-financing frameworks with entities such as the Green Climate Fund, the New Partnership for Africa's Development, and regional development banks like the Development Bank of Southern Africa and the China Development Bank. Policy dialogues occur with intergovernmental platforms including the United Nations, the G20, and the BRICS New Development Bank Working Group while engaging civil society and private sector stakeholders similar to consultation processes used by the Asian Development Bank and the European Investment Bank.
Criticisms and Controversies
Critics have compared project selection and governance to controversies faced by the World Bank and the Asian Development Bank, pointing to concerns about transparency and environmental safeguards reminiscent of debates over projects funded by the International Monetary Fund and the Inter-American Development Bank. Observers have raised issues similar to those in critiques of the China Development Bank and Export-Import Bank of China concerning geopolitical influence and conditionality, and scholars have debated accountability mechanisms in forums such as the United Nations Conference on Trade and Development and at academic symposia hosted by institutions like London School of Economics and Harvard Kennedy School. Debates over currency exposure, credit risk, and capital adequacy echo discussions in the Basel Committee on Banking Supervision and among sovereign bond market participants like the International Capital Market Association.