MOSCOW (Sputnik) – The broader objectives of the International Monetary Fund (IMF) are similar to those of the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (BRICS bank), so the financial structures are more likely to coexist, maintaining competition, than to replace one another, experts have told Sputnik.
According to Zi Zhonghai, the New Development Bank will never replace the IMF as they are both viable financial channels for investment, with the BRICS bank being similar to the World Bank.
The expert added that developing markets need their own financial structures, such as AIIB and the BRICS bank that will be capable of cooperating and maintaining honest competition at the same time.
"In terms of areas of activity, AIIB and the BRICS bank share common ground. They should define their areas of activity more clearly," Zi Zhonghai said, explaining that AIIB should focus on infrastructure investments and restrict its activities to Asia, including Russia's eastern regions, while the New Development Bank should concentrate on investments aimed at economic development in the BRICS countries.
Meanwhile, Francis Kornegay, Senior Research Fellow at South Africa's Institute for Global Dialogue, told Sputnik on Friday that regional development banks could help reduce the global dominance of the dollar.
"I don't see this in zero-sum terms as there are many in the West who see the need for a transition of some sort from USD hegemony," Kornegay said, explaining that the "internationalization of BRICS currencies, principally China's" reduces the power of the dollar as the world's leading reserve currency.
On July 15, 2014, the BRICS member countries signed an agreement to establish the $100-billion New Development Bank, formerly referred to as the BRICS bank, and a reserve currency pool worth another $100 billion.
Russia will contribute $18 billion to the pool, along with India and Brazil. China is expected to contribute the largest share of $41 billion, with South Africa chipping in the remaining $5 billion.
The AIIB is an international financial institution proposed by China that aims to invest in infrastructure projects in the Asia-Pacific region. The bill establishing the bank was signed by 21 countries in October, 2014.
Together with the BRICS New Development Bank, the AIIB is seen as an alternative to Western-led financial institutions such as the World Bank and the IMF.
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