The New Development Bank (NDB), the Shanghai-based lender better known as the “BRICS bank”, has thrown its weight behind the plan by its founding member countries to push for the use of local currencies to facilitate trade and transactions. The NDB has also embraced the plan to deepen the use of local currencies of its founding BRICS members when it executes funding transactions on infrastructure and sustainable development projects. Vladimir Kazbekov, the vice president and chief operating officer of NDB, said the bank plans to develop local/national currency transactions between BRICS member countries. This would allow one BRICS member to use its currency to finance projects with a fellow member in its country. Although the ‘BRICS bank’ has always stated its intention to increase its local currency fundraising and lending, it has rarely provided details on the mechanisms of doing so. How the NDB’s funding and lending works is that it borrows money on the Chinese market, funding projects from the proceeds of its bond issuances that are traditionally denominated in the renminbi/yuan.
Will the NDB Replace Existing Financial Institutions in Lending Funds to Developing Nations?
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