In 2006, foreign ministers of the initial four BRIC General states (Brazil, Russia, India and China) met on the sidelines of the General Debate of the UN Assembly, marking the beginning of a new alliance between the BRIC nations. The first official BRIC summit was held in 2009. Its focus was on improving the global economic situation and reforming financial institutions and better cooperation between the four nations in the future.
In the aftermath of the 2009 summit, the nations announced the need for a new global reserve currency. The replacement of the US dollar as such was not directly mentioned, but the inference was most definitely there.
South Africa became a member in 2010, after which the group was renamed BRICS. In 2011, the BRICS forum was formed, which is an independent international organisation encouraging commercial, political and cultural cooperation between the BRICS nations. At the fifth BRICS summit in 2013, the member states agreed to create a global financial institution to rival the IMF and World Bank, which they called the New Development Bank (NDB).
The BRICS financial strategy is based on:
- Reform of the global monetary system to create a representative, stable and predictable system of world reserve currency.
- Reduction of the risk of destabilization of the currency and stock markets, linked to the massive cross-border capital flows.
- Increasing the use of national currencies in trade with BRICS countries.
- Increasing the level of cooperation between the BRICS countries to promote their interests in world trade.
- Strengthening of the BRICS exchange rate cooperation.
- To achieve independent rating agencies.
The BRICS Contingent Reserve Arrangement (CRA) was established in 2015. Its objective was to provide protection against global liquidity pressures. This includes currency issues where members’ national currencies are being adversely affected by global financial events. The CRA is generally seen as a competitor to the International Monetary Fund (IMF). Clearly this is key to the BRICS nations and associates being able to operate independently in the event of a systemic global crisis. This was a significant development in the context of the current and future management of financial events in a prudent and expedient manner, which excludes Western nations.
The BRICS vision for the future is worthy of consideration as it will showcase the ideology behind the further development of a multipolar world. In a general sense, there will be a significant uplift in the cooperation in trade, investment, finance and cooperation. China has injected funds into the NDB to finance a new South-South cooperation corporation to assist fellow developing countries to tackle famine, refugee, public health and other challenges.
The BRICS alliance intended to seek momentum in the sphere of economics to expand their remit via decisions based on consultation, enhanced operation to achieve concrete results, the sharing of experiences to assist others and to achieve genuine equality across all nations.
China has already undergone significant structural reform, pursuing innovation driven growth and the other BRICS nations are seeking to adopt those principles as well. The BRICS nations recognise that there is a new industrial revolution underway and they need to be one step ahead. In such industrial transition and transformation there is a need to acknowledge that old growth drivers are now redundant and to recognise the need to embrace new growth drivers, such as the digital economy.
The BRICS nations are seeking to establish and enhance global economic governance and to counter protectionism. The alliance seeks to establish an open and inclusive world, to advance trade and true liberalisation. It is also pursuing partnerships with other developing nations, which began with the BRICS Plus initiative, whereby we would see the integration of emerging markets and developing nations.