UPSC Prelims 2016 · Question 92 of 98

UPSC Prelims 2016 question on New Development Bank

Consider the following statements:

1. New Development Bank has been set up by APEC.

2. The headquarters of New Development Bank is in Shanghai.

Which of the statements given above is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2
Show answer

Answer: B. 2 only

Verdict

The answer is 2 only. The New Development Bank is headquartered in Shanghai, but it was set up by BRICS, not APEC.

Analysis

Statement 2 is CORRECT. The Bank's headquarters are at Shanghai in China, with a regional centre in South Africa. Statement 1 is INCORRECT. The New Development Bank was established by the BRICS group, that is Brazil, Russia, India, China and South Africa, beginning with fifty billion dollars of initial capital contributed equally at ten billion each, with an initial focus on infrastructure projects. Asia-Pacific Economic Cooperation is a separate forum and did not create the Bank.

Source

The Hindu reporting on BRICS and the New Development Bank.

How to crack it

The equal capital contribution is the structural clue, because equal shares among five members is a design that only a small grouping of self consciously equal partners would adopt, and it distinguishes the Bank sharply from the weighted voting of the Bretton Woods institutions. Attach each new multilateral bank to its founders and headquarters as a pair, since the New Development Bank goes with BRICS and Shanghai while the Asian Infrastructure Investment Bank goes with China and Beijing.

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