Monetary and financial power of the BRICS countries: What has changed since the 2008 Global Financial Crisis and why it matters

Abstract

This paper analyses the ongoing transformations in the international monetary and financial system and the role played by the BRICS countries. It argues that while the changes the BRICS countries triggered have been marginal, because there was not a substantial change in the underlying power relations, these changes matter because they are forms of power. It looks into three areas where the group was relatively successful in challenging the system: (i) increasing their voice in major global economic forums (focusing on the IMF and the G20), (ii) creating new international financial institutions and (iii) influencing the IMF’s new institutional view on capital flows. It then discusses the limits of the BRICS’ monetary and financial power given their subordinated position in the currency hierarchy, China being the exception. Understanding the rise and limitations of the BRICS’ monetary and financial power is important because they challenge the existing theoretical framework to advance if it wants to understand how emerging market and developing economies, and the groupings formed by them, act in order to uphold their interests in a system which is rigid, hierarchical and still dominated by advanced economies.