China's Parliament Approves BRICS Development Bank Agreement

China is the latest BRICS country to ratify the agreement, which was signed by the five members of the bloc in July 2014.

The Standing Committee of the National People's Congress, China's top legislative body, on Wednesday approved the agreement signed in Brazil last year between the five BRICS nations to create a new multilateral development bank.

Chinese media reported on Wednesday that the agreement was ratified at the Standing Committee's bimonthly-session on July 1, ahead of the inaugural meeting of the bank's Board of Governors in Moscow on July 7, which will launch the New Development Bank [NDB].

The founding agreement was signed by the governments of Brazil, Russia, India, China and South Africa during the sixth BRICS summit, which was held in Brazil in July last year.

The NDB will have initial authorized capital of $100 billion, and initial subscribed capital of $50 billion, to be equally shared among its five members. The paid-in reserves are planned to be denominated in each country's currency, and are intended to finance infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries. 

As well as the capital base, the NDB will have a $100 billion Contingency Reserve Arrangement to provide liquidity support to member countries in response to short-term balance of payments problems.

In an interview with RIA Novosti on Tuesday, in the course of this week's Civil BRICS Forum in Moscow, Chinese ambassador to Russia Li Hui explained that the bank's formation "is of great strategic importance for the construction of cooperative structures by BRICS countries."

"The formation of the bank not only helps to solve the problem of a lack of financing for infrastructure and similar projects within the framework of BRICS, but also aids developing economies to withstand the volatility and unpredictability of the world system of finance, and also plays an important role in the stable development of the world economy."

The bank will have its headquarters in Shanghai, and a regional center in Johannesburg, South Africa. The first chairman of the bank's board of governors will be Russian Finance Minister Anton Siluanov, and the first president will be Indian banker Kundapur Vaman Kamath, formerly of the Asian Development Bank.