BRICS invites six new countries to join the bloc, including Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and UAE. 


15th BRICKS- Plus Summit 2023 , South Africa 

Leaders of the Brics bloc of leading developing countries have agreed mechanisms for considering new members, South Africa said on Wednesday, paving the way for dozens of interested nations to join the group which has pledged to champion the "global south". Agreement on expansion could help lend global clout to Brics - Brazil, Russia, India, China and South Africa - at a time when geopolitical polarisation is spurring efforts by Beijing and Moscow to forge it into a viable counterweight to the West. "We have agreed on the matter of expansion," South Africa's foreign minister Naledi Pandor said on Ubuntu Radio, a station run by her ministry, following a meeting by Brics leaders at athree-day summit.


Why need a new global currency?

The US dollar is facing challenges from developing countries that are threatening its status as the global reserve currency. A handful of alliances in Asia, Africa, and South America are looking to end dependency on the U.S. The BRICS and ASEAN groups are at the forefront of challenging the US dollar’s status. Developing countries fear U.S. sanctions could hurt their economies and, therefore, want to strengthen their local currencies and economies. The de-dollarization efforts are in full swing in 2023, and nearly two dozen countries want to ditch the U.S. dollar. Additionally, the BRICS alliance concluded to stop settling international trade using the U.S. dollar at the summit in August this year. BRICS will use local currencies for trade and is also looking to create a common currency among member nations. The trade will be settled within the existing bloc of 10 countries and not with other nations outside the alliance.

      
  

New Development Bank (NDB)

After the recently concluded BRICS summit in South Africa, the focus has now shifted to the New Development Bank (NDB). The young bank, set up in 2014, by the BRICS members is not only set to increase its lending to the Global South but much of it could be undertaken in local currencies, a move that will deal a blow to the US dollar. Even as there may not be an immediate launch of a BRICS common currency, analysts said that the Shanghai based lender is bound to promote lending in local currencies.

The NDB has already issued debt in South African rand for expanding lending in the African nation. It has attracted 2.67 billion rand of bids, according to news agency Reuters. The bank has also indicated that it is firming up plans for an Indian rupee bond in October. While at present, the role of NDB in lending to countries has remained limited, the expansion of the BRICS bloc with the inclusion of Saudi Arabia, UAE, Iran, Egypt, Ethiopia and Argentina is expected to provide wings to the multilateral lender.



Challenges of NDB:  a general overviews


The establishment of the NDB stemmed from the desire for change in the global financial architecture, which historically has received criticism for privileging the particular interests of Western powers while limiting the access of poorer countries. Others see the NDB as complementary to the existing international financial institutions by fostering competition, providing more opportunities for countries to source international investments. At present, the bank claims approved financing of US$32.8 billion for 96 projects in member countries.
However, NDB and its Present face Dilma Rousseff significant challenges to push these projects forward. One of the main challenges that the NDB faces is an increasingly complex geopolitical environment, brought on by economic and strategic competition. Aside from the increasing rivalry between China and India – two Asian powerhouses – potentially straining relations between BRICS members, the NDB is also grappling with the fallout and economic repercussions from the Russian invasion of Ukraine.

Since March 2022, Russia has had all negotiations within NDB frozen, which account for a total exposure of $1.8 billion to Russian-domiciled entities. As the NDB relies on external financing (via mechanisms such as the issuance of debt securities in domestic and/or international capital markets) and capital from the bank’s members, the ongoing conflict combined with external pressure from the West and sanctions on Russia have hindered the NDB’s quest for foreign funds.

To address these issues, the BRICS bloc is considering admitting more new members. Russian Foreign Minister Sergey Lavrov recently claimed that “more than a dozen” countries have expressed interest in joining the economic group, including Afghanistan, Argentina, Indonesia, and Saudi Arabia.

Visit NDB Website:Head Quarter: 
  • NDB moved to its permanent HQ in Shanghai. 
  • India Regional Office in Gujarat International Finance Tec-City was established. NDB's General Strategy for 2022–2026 was approved by Board of Governors.