I turn now to discuss the financial institutions or mechanisms created by the BRICS, starting with the reserve pooling arrangement, later called the BRICS Contingent Reserve Arrangement (CRA). The origins of the CRA can be traced back to the mid-2000s, to a period preceding the actual establishment of the BRICS in 2008. When I arrived in Washington, DC, in April 2007, to occupy a seat as executive director in the IMF Board, my predecessor in the position, Eduardo Loyo, drew my attention to two issues that pertain to the matter at the hand.

He stressed, first, the enormous difficulty in making any progress at all in terms of IMF reform. This was indeed the situation in the earlier part of 2007. The subsequent financial crisis in the United States and Europe, especially after Lehman collapsed in September 2008, would change the picture and allow us to make progress in this field. But even after 2008, as mentioned above, progress would be limited and always obtained in the teeth of hefty resistance of overrepresented countries, including notably most of Europe.

Second, Loyo told me, it was important to keep an eye on monetary cooperation in East Asia, where 13 countries, led by Japan, China, and South Korea, had been gradually putting into place, since 2000, a reserve pooling arrangement, called the Chiang Mai Initiative. Initially a network of bilateral swap arrangements, Chiang Mai could be seen as an embryonic Asian Monetary Fund, something that was watched with concern by Americans, Europeans, and the Administration of the IMF. Their worry was that this initiative might open the way for a fragmentation of international governance and a loss of “centrality” of the IMF, an institution that they tightly controlled. As we know, the Fund was, and remains to this day, essentially a North Atlantic organization. From the point of view of EMDCs, even outside Asia, the establishment of an Asian Monetary Fund was a welcome development as it might exert pressure to move forward with IMF reform and provide a template for similar initiatives in other regions of the world.

The deep international financial crisis of 2008–9, centered on the US and European financial systems, distracted all of us from the issue. Also, G20 negotiations in 2008–10 held up the expectation that IMF reform might after all make substantial progress.