VEB’s Deputy Chairman: the BRICS bank could become a payments center in national currencies

Now the New Development Bank’s mandate does not provide for it to make payments said Deputy Chairman of State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ Sergei Vasiliev.But he believes that it is quite natural if the New Development Bank will be responsible for making payments in national currencies.

MSCOW, July7 – RIA Novosti/Prime. In his interview to RIA NovostiDeputyChairman of State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ Sergei Vasilievsaid thatmember countries of the BRICS New Development Bank could in the future transform it into a payments center in national currencies.

“Now the New Development Bank’s mandate does not provide for it to make payments said Deputy Chairman of State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ Sergei Vasiliev. But I believe that it is quite natural if the New Development Bank will be responsible for making payments in national currencies”, said VEB’s Deputy Chairman.

Deputy Foreign Minister of India on Economic Affairs Sujata Mehta informed last week that the BRICS countries were working on transferring to national currencies upon conducting trade inside the association.

According to VEB’s Deputy Chairman until the New Development Bank hasbeen established,it’s difficult to say about what specific projects it is going to fund. At the same time,Vasiliev did not rule outthat “the Bank would fund projects aimed at economic integration of the BRICS countries or infrastructure projects or infrastructure projects associated with mutual trade of the BRICS countries”.

The first meeting of the New Development Ban k’s board of governors is to be held on Tuesday in Ufa. At this session, a decision is to be made on launching this new financing institution headed by Brazil, Russia, India, China and RSA, said Vasiliev. “This is an organizational meeting where a decision to start operations is to be made and the Bank’s managerial staff and regulatory documents are to to be approved an.

MEMBER COUNTRIES

An agreement on the establishment of the New Development Bank was signed in July of 2014 in Brazil.Initially, there were plans that it would be referred to as the BRICS Development Bank but later on member countries decided against this name for other countries to be able to enter into the Bank’s capital. The New Development Bankis expected to become one of the largest development institutions to fundinfrastructure projects in the BRICS countries -an alternative to the World Bank and the IMF. The first President of the Bank is to be India’s representative and it is to be headquartered in Shanghai. The amount of paid up capital is to be 10 billion dollars (each of five countries is to contribute 2 billion dollars) asrequired, in the future it can be increased by 40 billion dollars. A maximum possible amount of authorized capital is set at a lev el of 100 billion dollars.

According to VEB’s Deputy Chairman, any country can join the New Development Bank including Greece, which expressed hope that it could become member of this new financing institution. “But the BRICS countries will always have a majority stake”, explained Vasiliev.

INTERNATIONAL PROJECT FINANCE CENTER

A session of the SCO Interbank Consortium (Russia, China, Kazakhstan, Tajikistan, Kirgizia and Uzbekistan) will also be held in Ufa this week. Vnesheconombank as a presiding bank in the SCO this year initiated an idea to establish an International Project Finance Center.

According to VEB’s Deputy Chairman, upon considering major national and international projects VEB and its partners constantly encounter a problem that borrowers do not always make pre-project preparation of investment proposals in a thorough and qualitative way. Naturally, this reduces their chances to receive financing for implementing their projects.

“In our opinion, the establishment of an International Project Finance Center would make it possible to remove this obstacle. We have to admit that a greater number of these proposals are rough and it takes time (sometimes at least a year or two)to finalize them”, stressed Vasiliev.

According to him, we can use expertise of SCO countries pre-project preparation institutions. The Federal Project Finance Center set up by VEB is such an institution. It works with borrowers and helps them to structure projects.

Vasiliev said that the said proposal was backed by almost all countries. VEB’s proposal is being studied now.