(Transcript from SBS World News Radio)
A new bank and an emergency reserve fund have been set up with the aim of breaking the domination of Western financial institutions.
The move comes from the so-called BRICS countries -- Brazil, Russia, India, China and South Africa.
The $50 billion bank, and a $100 billion fund to fight financial crises, will be based in Shanghai.
Zara Zaher reports.
(Click on the audio tab above to hear the full report)
The BRICS nations unveiled the New Development Bank at a summit in Brazil.
The joint venture by Brazil, Russia, India, China and South Africa - is seen as an alternative to the Western-dominated World Bank and International Monetary Fund.
Brazil's President, Dilma Rousseff is hosting the sixth BRICS summit in the Brazilian city of Fortaleza.
Speaking to Al Jazeera, Ms Rousseff has explained the motivation behind the new bank.
"The new bank will have the possibility of a relationship with other countries in the world that we are interested in. What is clear is the need of institutionally empowering the bank. The bank will be one of the great initiatives along with the G20 for this multipolar world translated into different structures. This does not mean that we are against the other structure. We are going to live with that other one. But - different financial structures, organisational structure between countries of regional policies - all this the BRICS represent in the right way."
The long awaited bank is the first major achievement of the BRICS countries since its establishment in 2009.
The bank's first president will be from India and the board's chairman will be Brazilian.
It will start lending in 2016 and will be open to membership by other countries.
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.
Indian Prime Minster Narendra Modi applauded the group for reaching a consensus after the idea was first floated in his country two years ago.
"A new development bank at the Delhi summit two years ago has been made into reality in Fortaleza. It will benefit BRICS nations, but will also support other developing nations. And it will be rooted in our own experiences as developing countries."
Negotiations over the headquarters and first presidency were reached at the eleventh hour due to differences between India and China.
Brazil and India fought China's attempts to get a bigger share in the lender than the others.
The impasse reflected the difficulties that the five countries face in working together.
Chinese President Xi Jinping says the agreement will have far reaching benefits for BRICS members and other developing nations.
"Through the concerted effort from all sides, we have managed to reach a consensus in the creation of the BRICS development bank. This is the result of the significant implications and far reach of BRICS cooperation. And is therefore the political will of BRICS nations for common development. This will not only help increase the voice of BRICS nations in terms of international finance, but more importantly, will bring benefits to all the people in the BRICS countries and for all peoples in developing countries."
Jagjit Plahe is the director of the diplomacy and trade program at Monash University in Melbourne.
She agrees that the new bank will benefit developing countries.
"The influence of the BRICS in much of the developing world is much higher than before. China is a major investor in Africa for instance where they're heavily investing in large parts of West Africa and East Africa. And so I feel that a large part of the developing world actually look to the BRICS and say well here's where we can be, where were these countries a while ago. And if these countries get together and offer us some diferent sort of facility where we don't have to wait for ages and we don't have to conform to the Washington consensus in order to get finance. I think to begin with they might be quiet pleased with this new system."
Jagjit Plahe says ventures by the BRICS nations such as the new bank will reshape the Western-dominated international financial system.
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