Russian Think Tank Proposes BRICS Bank as an Alternative to IMF

Russian Think Tank Proposes BRICS Bank as an Alternative to IMF

The Roscongress Foundation, a proficient Russian think tank, has put forth an intriguing idea in its latest report on the de-dollarization of energy markets. They propose that the New Development Bank, also known as the BRICS bank, could serve as a worthy alternative to established financial institutions like the International Monetary Fund (IMF). Member nations could secure loans based on their energy-exporting capabilities, which would be liquid and similar to the Special Drawing Rights (SDR) of the IMF.

New Development Bank  Could Function as a Credit Institution

The "Decolonization in Energy Markets" report suggests the New Development Bank could function as a credit institution for BRICS bloc members, offering loans based on their energy-exporting capabilities. These loans would enable energy-exporting countries to boost trade in their national currencies, even in the presence of trade imbalances. The report states:

"Energy-exporting countries could borrow these funds for the projects they need, allowing them to increase trade in their national currencies despite trade imbalances. The New Development Bank could serve as a platform for securing such energy loans."

Similar to the IMF's Special Drawing Rights (SDR), these loans would be liquid and convertible due to their multicurrency nature. As more nations join the BRICS bloc, the volume of trade involving these tools will increase significantly.

A Shift to an Alternative Financial System

Experts in Russian circles are actively discussing this proposal as a potential alternative to the existing US dollar-dominated financial system. Sergey Chevrychkin, a Russian financial analyst, believes that the fear of facing unilateral measures and economic sanctions will drive nations towards such alternatives.

Chevrychkin stated:

"I believe that in the long run, these measures will destroy faith in the transnational protection of property rights and weaponize the global financial system."

Considering the projected growth of the BRICS economies, which are set to surpass the combined share of the Group of Seven (G7) countries in global economic growth by 2028, the establishment of a global financial institution for BRICS nations seems inevitable. Additionally, the discussion on issuing a BRICS bloc-wide currency is on the agenda for the upcoming BRICS summit in South Africa, scheduled for August.

What is your take on the BRICS Bank becoming an alternative to the IMF? Please post your comment.