BRICS and the New Development Bank: Impact on the U.S. Economy and the Dollar

The BRICS nations and the New Development Bank have been a topic of interest among economists for the past years. The BRIC acronym, which is what it was named originally, was created by Jim O’Neill from investment bank Goldman Sachs back in 2001 in his paper titled, “Building Better Global Economic BRICs.” Since then, a letter has been added to the acronym, which is now known as BRICS and stands for the countries of Brazil, Russia, India, China, and South Africa. The reason for these countries being noticed in the world economy is due to their superior growth in GDP over the past decade. In his work, O’Neill predicted that, “Over the next 10 years, the weight of the BRICs and especially China in world GDP will grow, raising important issues about the global economic impact of fiscal and monetary policy in the BRICs.” O’Neill’s prediction was correct and now that these countries have come together to form a rising economic power in the world, one of the main projects in their agenda is to create the New Development Bank, whose primary goal is to finance infrastructure and sustainable development projects. To make progress on this deal, the leaders of the BRICS nations met in the city of Fortaleza in Brazil in July of last year to announce the creation of the new bank, which seems to be set up to rival the International Monetary Fund, or IMF. What’s more, it has also been considered that one of the goals of the New Development Bank will be to move away from the dollar as the main world currency