(Adds Rousseff quote, call for dialogue in Ukraine crisis)
By Alonso Soto and Anthony Boadle
FORTALEZA, Brazil, July 15 Leaders of the BRICS
emerging market nations launched a $100 billion development bank
and a currency reserve pool on Tuesday in their first concrete
step toward reshaping the Western-dominated international
The bank aimed at funding infrastructure projects in
developing nations will be based in Shanghai and India will
preside over its operations for the first five years, followed
by Brazil and then Russia, leaders of the five-country group
announced at a summit.
They also set up a $100 billion currency reserves pool to
help countries forestall short-term liquidity pressures.
The long-awaited bank is the first major achievement of the
BRICS countries - Brazil, Russia, India, China and South Africa
- since they got together in 2009 to press for a bigger say in
the global financial order created by Western powers after World
War Two and centered on the International Monetary Fund and the
The BRICS were prompted to seek coordinated action following
an exodus of capital from emerging markets last year, triggered
by the scaling back of U.S. monetary stimulus.
The new bank reflects the growing influence of the BRICS,
which account for almost half the world's population and about
one-fifth of global economic output.
The bank will begin with a subscribed capital of $50 billion
divided equally between its five founders, with an initial total
of $10 billion in cash put in over seven years and $40 billion
in guarantees. It is scheduled to start lending in 2016 and be
open to membership by other countries, but the capital share of
the BRICS cannot drop below 55 percent.
The contingency currency pool will be held in the reserves
of each BRICS country and can be shifted to another member to
cushion balance-of-payments difficulties. This initiative
gathered momentum after the reverse in the flows of cheap
dollars that fueled a boom in emerging markets for a decade.
"It will help contain the volatility faced by diverse
economies as a result of the tapering of the United States'
policy of monetary expansion," Brazilian President Dilma
"It is a sign of the times, which demand reform of the IMF,"
she told reporters at the close of the summit.
China, holder of the world's largest foreign exchange
reserves, will contribute the bulk of the contingency currency
pool, or $41 billion. Brazil, India and Russia will chip in $18
billion each and South Africa $5 billion.
If a need arises, China will be eligible to ask for half of
its contribution, South Africa for double and the remaining
countries the amount they put in.
Negotiations over the headquarters and first presidency were
reached at the eleventh hour due to differences between India
and China. The impasse reflected the trouble Brazil, Russia,
India, China and South Africa have had in reconciling stark
economic and political differences that made it hard for the
group to turn rhetoric into concrete action.
"We pulled it off 10 minutes before the end of the game. We
reached a balanced package that is satisfactory to all," a
Brazilian diplomat told Reuters.
Negotiations to create the bank dragged on for more than two
years as Brazil and India fought China's attempts to get a
bigger share in the lender than the others.
In the end, Brazil and India prevailed in keeping equal
equity at its launch, but fears linger that China, the world's
No. 2 economy, could try to assert greater influence over the
bank to expand its political clout abroad. China, however, will
not preside over the bank for two decades.
Facing efforts by leading Western nations to isolate Russia
for annexing Crimea and stirring revolt in eastern Ukraine, the
BRICS summit provided President Vladimir Putin with a welcome
geopolitical platform to show he has friends elsewhere, economic
powers seen as shaping the future of the world.
The BRICS abstained from criticizing Russia over the crisis
in Ukraine and called instead for restraint by all actors so the
conflict can be resolved peacefully.
(Editing by Tom Brown and Jonathan Oatis)