Bank Integration into the International Financial Architecture - - PowerPoint PPT Presentation
Trade offs for the BRICS Bank Integration into the International Financial Architecture Background South Africa joined the BRICS in 2010. It is a commitment that comes with great prestige as well as responsibilities. There is a need
Integration into the International Financial Architecture
responsibilities.
country to a high income country
involvement in the BRICS in the areas of:
member of to integrate into the international financial system as this will expand the benefit that the BRICS will provide to SA in the aforementioned areas.
stakeholders may enable large capital infusion at times of contingency as well as provide specific experience and expertise for NDB’s
ideological views as far as the development mandate for the bank and its methods and terms of providing finance is concerned.
and financial institutions for funding and expertise.
have to pursue given the conflicts existing between its developmental mandate and the sources of finance and expertise needed to achieve the same mandate.
Goal Mechanism Indicator Finance sustainable and energy efficient projects that will improve the blocs energy security Investment in renewable energy projects and energy efficient technologies. Reduced cost per kiloiwatt hour economic output Increase knowledge creation within the BRICS bloc Fund research among academic institutions and sponsor collaboration among them. Increased knowledge base from which to formulate policy to drive the BRICS institutions. Intergrade the New Development Bank into the Global Financial Architecture. Engaging in borrowing and lending arrangements with existing and future international financial institutions worldwide. Increase in the ratio of Yuan to USD denominated international investment flows. Mobilizing resources for infrastructure and sustainable development projects in BRICS Equity investments,bonds,guarantees by the Bank. Amount of money raised for infrastructure projects Poverty reduction among developing countries. Investing in sustainable developmental projects aimed at improving the livelihoods of disadvantaged groups within the bloc and in developing countries. Gini Coefficient Provide Social Housing Accelerated RDP program or social housing schemes Number of people housed under social housing scheme Provide social infrastructure e.g. roads, hospitals and schools Deliberate infrastructure build program Reduction of infrastructure backlog in BRICS countries Utilise NDB funding to fund developmental projects in developing countries. Extending funding to developmental projects in developing countries, that existing financial institutions are not willing to fund. Improved social development outcomes as a result of NDB financing.
Type Player / Identity Size Timing Import. Administrative BRICS Central Banks: Increased Fund mobilisation, disbursements and oversight obligations Huge As soon as the Bank gets
High Beneficial BRICS Governments: Increased policy and financing options Huge As soon as the bank gets
High Financial Developing Countries: Additional borrowing capacity with limited political conditions Huge As soon as Bank gets operational High Financial IMF: Reduced uptake of loans Huge When Bank goes operational High Financial World Bank: Reduced uptake of loans and technical assistance Huge When the Bank goes operational High Indirect Civil Society: Added monitoring and evaluation obligations Huge As soon as Bank gets operational Medium
Player / Interest Type Priority BRICS Central Banks: Maintain monetary policy autonomy Self-Interest Medium BRICS Governments: Independence from American Hegemony Ideological High Civil Society: Whether the Bank will include
developmental objectives among its funding objectives. Humanitarian High Hedge Funds: Opportunities to find yield for uninvested funds Financial High IMF: Maintained loan uptake from developing countries and maintenance of economic influence Financial High UNCTAD: Establish ideological influence on the Bank Ideological Medium UNDP: Establish ideological influence on the Bank Ideological Medium World Bank: Maintained loan uptake among heavily indebted economies and maintenance of economic influence Financial High WTO: Sustained trade facilitation through trade potential unlocked by the additional funds flowing amongst the BRICS and to other developing countries. Organizational High
Player name Opportunity Obstacle BRICS Central Banks Enhanced monetary policy cooperation and information exchange Incongruent monetary policies in place Hedge Funds Economic growth opportunities in developing countries Insufficient knowledge about emerging economies and negative risk perception of these as investment destinations and go between for funding to developing countries IMF Extend funding and technical assistance to the New Bank to extend its influence. Heavy indebtedness of developing countries that might create a hindrance to any kind of additional funding being availed under the dispensation of the NDB UNCTAD Involvement in a new development paradigm Differing development ideologies between UNCTAD and the Bank as far as economic development is concerned. UNDP The creation of a new development paradigm A development dogma steeped in Bretton Woods ideologies of development. World Bank Could extend its influence by collaborating with the bank given a background of infrastructure development opportunities available in the region that the Bank intends to operate Existing ideological differences that exist between the Bank and the World Bank WTO Better trade arrangements for global trade Need to maintain status quo because of financial interests
Player Strategy and Actions Challenges Timeline Civil Society Persuade non-mobilized to take a position of support, by promising them benefits compared to other policies.: Involve them in the decision makng of the bank by giving them a platform to air their veiws of what the Bank should be prioritising in developing countries such as the BRICS.
As soon as the Bank gets operational Hedge Funds Create a new organization or partnership of existing organizations and individuals, to involve non-mobilized: Create an organisation that will look out for the risk perceptions of private investors to ease concerns and enhance involvement.
As soon as Bank gets operational IMF Negotiate with the opposition, and offer concessions on other policies of interest, in exchange for reversal of opposition.: Engage with IMF to find ways with which the Bank could collaborate with them in the development finance arena. Access to political leadership. Long drawn out negotiations that could cost time and money. Reduced clout due to choosing to negotiate,Could lose supporters As soon as bank gets operational
Ratings Agencies Persuade opponents to weaken their position, by adding desired goals or mechanisms to the policy.: Letting the Rating Agencies measure the value of the Bank's paper according to their standards
Agencies who could be biased. Ongoing UNCTAD Change decision-making processes, in order to prevent some opponents from participating.: Create an alternative BRICS based trade
Finance to set up organisaiton. Staffing for the
1-3 years UNDP Persuade opponents to weaken their position, by adding desired goals or mechanisms to the policy.: Engage in negotiations to build a working relationship that will benefit both the Bank and UNDP Political support Drawn out negotiations that will hamstring development From when the Bank goes operational World Bank Persuade opponents to weak their position, by adding desired goals or mechanisms to the policy.: Incorporate economic management principles that are compatible with opponenents into lending criteria. Economic:Adjustments in economic structures From when the Bank goes operational WTO Meet with opponents to seek common goals or mechanisms, and thereby reduce the intensity
with WTO and seek better trade arrangements for the output from the bloc Negotiation expertise. Experienced and knowledgable teams to arrange terms of
1-5 years
Financial Architecture.