The BRICS Expansion: A New World Bank in the Making?
- One Young India
- Aug 15
- 4 min read
1. Introduction: A New Era in Global Finance?
For decades, the global financial system has been dominated by the International Monetary Fund (IMF) and the World Bank, institutions heavily influenced by Western powers—particularly the United States and its allies. But over the past few years, a quiet revolution has been brewing, led by the BRICS—Brazil, Russia, India, China, and South Africa.
In August 2023, the BRICS bloc announced the inclusion of new members, marking a historic expansion. With this move, BRICS is signaling its intent to challenge Western financial dominance and potentially create a new framework for global economic governance.
Could this be the birth of a “New World Bank”—one that isn’t headquartered in Washington, D.C., but instead reflects a multipolar world order? Or is it just another political statement without real economic teeth?
2. The Origins of BRICS: A Response to the West’s Monopoly
BRICS wasn’t always the geopolitical powerhouse it aspires to be today. The term was coined in 2001 by economist Jim O’Neill, describing emerging economies with high growth potential. Initially, it was more of an economic curiosity than a political alliance.
Over time, however, the member nations realized they shared common frustrations:
Over-representation of the West in financial institutions like the IMF and World Bank.
Dependency on the US dollar for trade settlements.
A desire for economic sovereignty and the ability to set their own development agendas.
The first formal BRIC summit took place in 2009, with South Africa joining in 2010 to form BRICS. From the outset, the group sought alternatives to Western-led institutions—culminating in the creation of the New Development Bank (NDB)in 2014.
3. The 2023 Expansion: Who’s In?
The latest expansion brought in Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates—a mix of African and Middle Eastern powers with significant geopolitical and economic weight.
3.1 Why These Countries Matter
Energy Powerhouses: Saudi Arabia, UAE, and Iran control a large share of global oil reserves.
Strategic Location: Egypt controls the Suez Canal, a vital global trade artery.
Africa’s Rising Influence: Ethiopia and Egypt are key players in the African Union and regional stability.
This expansion gives BRICS:
Greater influence in global energy pricing.
Stronger representation in Africa and the Middle East.
A broader voice in non-Western financial networks.
4. The BRICS Vision: An Alternative Financial Order
At its core, BRICS aims to create:
Financial Independence from the West – By settling trade in local currencies instead of the US dollar.
Infrastructure Financing Without Political Strings – Unlike the World Bank, which often imposes governance reforms as conditions for loans.
A Multipolar Economic System – Where emerging economies have a greater say in decision-making.
The New Development Bank (NDB) already operates as a BRICS alternative to the World Bank, financing infrastructure and sustainable development projects in member countries.
5. Can BRICS Really Rival the World Bank?
Here’s where things get tricky. The World Bank and IMF aren’t just big because of their money—they’re big because they set the rules of the game.
5.1 Strengths of BRICS
Combined GDP: Over $28 trillion with the new members.
Population Size: Representing nearly 45% of the world’s population.
Natural Resources: Control over vital commodities like oil, rare earth metals, and agricultural goods.
5.2 Weaknesses and Challenges
Diverging Interests: India and China have border disputes; Iran and Saudi Arabia have a history of rivalry.
Currency Settlement Issues: No unified BRICS currency yet—relying on bilateral deals instead.
Lack of Global Trust: Many countries still see Western institutions as more stable.
6. The Dollar Question
One of the most ambitious BRICS goals is to reduce dependence on the US dollar in global trade. This is easier said than done.
The dollar remains dominant because:
It’s seen as a safe, stable currency.
Most global commodities (especially oil) are priced in USD.
Deep, liquid US financial markets make transactions easy.
While BRICS has started promoting local currency settlements—like India-Russia rupee trade or China-Brazil yuan trade—creating a single BRICS currency is politically and economically challenging.
7. How the West is Responding
Western powers aren’t ignoring BRICS’ rise.
The US has tightened sanctions on certain BRICS members (like Russia and Iran), indirectly pushing them closer to each other.
The EU is increasing investment in Africa to counter China’s Belt and Road Initiative.
G7 Summits now frequently address BRICS-related concerns.
The more BRICS grows, the more the West will try to influence or counteract its moves—whether through diplomacy, trade agreements, or security pacts.
8. Is BRICS Really a “New World Bank”?
Not quite—not yet. The NDB is still far smaller than the World Bank, with total capital of $100 billion compared to the World Bank’s over $400 billion. But the intent is clear: BRICS wants to create a parallel system that offers:
Faster loan approvals
Fewer political conditions
A development-first approach
Over time, if BRICS strengthens its currency mechanisms, expands membership further, and boosts NDB lending, it could become a genuine alternative.
9. India’s Position: Balancing East and West
India finds itself in a unique spot. As a BRICS founding member, it supports the bloc’s multipolar vision. But India also has deep economic and defense ties with the US and EU.
India’s approach:
Support de-dollarization in principle, but avoid confrontation with the West.
Push for more BRICS projects in Africa and Asia to strengthen influence.
Use BRICS as a platform to counterbalance China’s dominance.
10. Conclusion: The Start of a Financial Power Shift?
The BRICS expansion is more than just a headline—it’s part of a long-term strategy to challenge Western dominance in global finance. But whether it becomes a “New World Bank” depends on:
Overcoming internal rivalries.
Building trust in its financial systems.
Offering real advantages over Western institutions.
If BRICS succeeds, we may look back on the 2020s as the decade when the global financial order began to shift for good.
