This month the BRICS group met in Brazil to sign an agreement on the establishment of an independently funded government infrastructure-lending bank. The BRICS groups, an association between five emerging but powerful economy nations (Brazil, Russia, India, China and South Africa) are seeking to set up an institution that can offer developing nations structural loans for developing nations. The bank’s headquarters is to be set up in Shanghai, China, where it will be run in cooperation from all member nations.

Aptly named as the ‘New Development Bank’ (NDB), the BRICS hopes to provide an alternative to the American and European led World Bank and International Monetary Fund. Established in 1944, these institutions have been notorious for predatory lending and unfair interest schemes. The NDB pledges to focus their lending efforts more so on job creation and poverty alleviation rather than the economic restructuring that the World Bank and IMF demand from client nations. With that being said, the Western institutions have reacted positively to the news, stating that the introduction of this new bank can only help expedite global poverty reduction.

Analysts were pleased to see the BRICS nations, which in themselves very diverse culturally and politically, agreeing on such a large project.  However, the plan was not without controversy. Some voices from member nations are concerned about China’s ability to wield power an unequal amount of power as their economy is larger than all other BRICS nations put together. Rules however were set in order to prevent such a situation, as each member nation will contribute an equal amount to an initial $50 billion. This fund will increase to $100 billion over time, and the bank will limit itself to lending $34 billion in total each year.

Particular rules of operation over interest rates, investment in private projects and other provisions have still yet to be solidified before the lender can become active. The bank is expected to make its first loan in 2016, however will be ready by next year in order to help its members if they were effected by a sudden exodus of foreign capital.

The opening of the NDB is quite a substantial effort to bolster the BRICS nation’s status, and a great step forward fostering greater support between the five members. This move, coupled along with other deals between the nations, signals a strong desire for a multi-polar world.

Much has been said regarding a supposed anti-Western ulterior motive for this institution, stating that this bank serves to turn the global balance of power away from the United States and Europe. However in response to these allegations, the BRICS’ stated that their aim is to fill in existing gaps in the global financial system while giving developing nations a stronger voice. The effectiveness of this banks remains to be seen, but there is no doubt the rhetoric and geo-political maneuvering behind this bank is strong.