Four years of inaction on an agreement to give China and other emerging economies a bigger say in the International Monetary Fund have spawned an alternative international lending institution. The BRICS nations - Brazil, Russia, India, China and South Africa - have signed off on a new development bank and reserve fund to provide financing to emerging markets and a counterweight to US dominance of the IMF and World Bank.

A summit of BRICS leaders in Fortaleza, Brazil, agreed on Shanghai as the new bank's headquarters, which reflects China's standing as a creditor nation and the key role of an increasingly internationalised yuan. Each country will contribute equally to initial capital of US$50 billion, but China will provide the lion's share of US$41 billion towards a US$100 billion reserve fund to fight financial crises.

The summit of the disparate BRICS group, attended by President Xi Jinping , agreed on a new level of economic cooperation aimed at meeting the development finance needs of fast-growing emerging economies. The bank is modestly capitalised in terms of the vision at this stage. But it is already being seen as a rival to Western institutions that are not always accommodating to the developing world. That said, it will face its own internal challenges of geography, economic inequality, and tensions between the three northern hemisphere partners.