Delivering ‘public goods’ and the changing financial architecture: can BRICS meet expectations?

Abstract

ABSTRACTThis paper examines the role BRICS institutions play in reforming the global financial system. The emerging economies of BRICS have long been resentful about the way in which the Bretton Woods institutions – the International Monetary Fund and the World Bank – have governed the global ‘public goods’. Although hailed as the ‘fire-fighter of the world economy’, these institutions proved to be ineffective in mitigating the effects of successive regional as well as global financial crises. Further, their inability to carry out meaningful internal reform fuelled widespread discontent among BRICS countries leading them to create alternate financial entities like the New Development Bank (NDB) and the Contingency Reserve Arrangement (CRA). A closer look at the functioning of these institutions however tells a different story. Although BRICS as a grouping had initially projected a joint front on the idea of public good based on collective choices and preferences, the rising power asymmetry within their own institutions has gradually eclipsed the revisionist agenda and rendered them status-quoist in their approach to reform. Thus, these new institutions, though initially believed to work as alternatives creating new norms and rules for the global financial system, are increasingly becoming complements to the extant institutions.