EXOGEN: THE BRICS BANK IS OFFICIALLY OPEN FOR BUSINESS
BRICS Development Bank officially opens for business
8 March 2016
The National Treasury announced the official establishment of the New Development Bank (NDB) headquarters in Shanghai, China on 27 February, which marks the completion of legal procedures that will now allow the bank to begin its operations, in a statement released on 7 March 2016.
The headquarters was first opened in July 2015, following the formal agreement on the bank’s establishment between BRICS leaders at its fifth annual summit, held in South Africa in 2013.
http://www.southafrica.info/business/economy/Brics-Development-Bank-opens-080316.htm#.VuAf4-ZvCT8
EXOGEN: THE New Development Bank is formally “open for business,” the Treasury said on Monday.
This follows the signature of an agreement late in February between China and the New Development Bank regarding the bank’s headquarters in Shanghai. The agreement completed all the necessary legal procedures for the bank to begin operations.
It is preparing for its first batch of projects, which could be launched in April. According to the bank’s media statements from Shanghai, it aims to lend up to $2bn this year.
The bank would place a lot of emphasis on the speed of its financing, the bank’s president, Indian banker KV Kamath said.
He said the first projects would be green energy ventures and infrastructure projects in member countries.
The Treasury said the bank was in the process of establishing its African regional centre in Johannesburg and had begun the process of recruiting staff. Former finance minister Nhlanhla Nene said on Monday that he had not received any further clarity about his position at the bank in SA, the reason given by President Jacob Zuma for his sudden removal from office in December. The president said Mr Nene had been removed as finance minister so he could head the regional centre in SA.
The 2016-17 budget review noted that SA’s first instalment of R2bn to the bank was paid in 2015 and made provision for further commitments of R11.8bn over the next three years (R3.75bn this year) to fulfil SA’s obligations to the bank.
Given the government’s straitened fiscal circumstances, this commitment has required the reprioritisation of spending in other areas.
With India providing the bank’s president, the bank’s four vice-president’s come from each of the other Brics member countries (Brazil, Russia China and SA). SA’s vice-president is Leslie Maasdorp, who, as chief financial officer, will be responsible for treasury and portfolio management as well as the finance, budgeting and accounting functions.
The bank was set up by Brics members with the aim of financing infrastructure and sustainable initiatives. It has been estimated that developing countries will need additional spending of almost $1-trillion a year for the next 20 years to meet their infrastructure requirements. It will have total capital of $100bn, 12.5% of which is to be paid in by the members in the first seven years, and a starting capital of $50bn, with each member country contributing $10bn.
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EXOGEN: Chinese Renminbi to be Identified in the IMF’s Currency Composition of Foreign Exchange Reserves
Press Release No. 16/90 March 4, 2016
The International Monetary Fund (IMF) will separately identify the renminbi (RMB) in its official foreign exchange reserves database starting October 1, 2016. The change will be reflected in the survey for the fourth quarter of 2016 that will be published at the end of March 2017.
The survey, known as COFER (Currency Composition of Official Foreign Exchange Reserves), lists, on a voluntary basis, the currency composition of holdings of foreign exchange reserves across the IMF membership in the form of statistical aggregates.
The separate identification of the RMB implies that, as of that date, IMF member countries will be able to record as official reserves their holdings of RMB−denominated external assets that are readily available for meeting balance of payments financing needs. The renminbi will join the group of currencies that are currently identified in the survey: U.S. dollar, Euro, Yen, Pound Sterling, Swiss Franc, Australian Dollar, and Canadian Dollar. All other currencies are listed together.
When the IMF Executive Board determined the RMB to be a freely usable currency and decided to include it in the basket of currencies that make up the Special Drawing Right (SDR), effective October 1, 2016, it underscored the importance of making efforts to address remaining data gaps, including in the currency coverage of the COFER survey, ahead of the next SDR review.
On February 26, 2016, the Board agreed to make the change in COFER effective October 1, 2016, thus providing the lead time necessary for COFER survey respondents to adjust to the change.
Background:
The IMF’s conducts the COFER survey on a quarterly basis and publishes at end of every quarter the aggregated data for a reference date of the previous end-quarter. Participation by countries in this survey is voluntary. Currently, the COFER database distinguishes separately monetary authorities’ claims on nonresidents denominated in the U.S. dollar, Euro, Yen, Pound Sterling, Swiss Franc, Australian Dollar, and Canadian Dollar. The claims are in the form of banknotes; bank deposits; treasury bills; other, short-and long-term, government securities; and other claims usable in the event of balance of payments need.
For reference:
The Board Paper: Separate Identification of the Chinese Renminbi in the COFER Survey. February 18, 2016
http://www.imf.org/external/pp/longres.aspx?id=5020
Q&A on the Separate Identification of Renminbi-Denominated Reserves Holdings, March 4, 2016
http://www.imf.org/external/np/sec/pr/2016/pdf/pr1690.pdf
The data can be accessed on imf.org:
http://www.imf.org/external/np/sta/cofer/eng/index.htm
Factsheet: Special Drawing Right (SDR)
http://www.imf.org/external/np/exr/facts/sdr.htm
Factsheet: Review of the Special Drawing Right (SDR) Currency Basket
http://www.imf.org/external/np/exr/facts/sdrcb.htm
Press Release: IMF Releases Data on the Currency Composition of Foreign Exchange Reserves with Additional Data on Australian and Canadian Dollar Reserves, June 28, 2013
http://www.imf.org/external/np/sec/pr/2013/pr13236.htm
IMF COMMUNICATIONS DEPARTMENT
Media Relations
E-mail: media@imf.org
Phone: 202-623-7100
