The New development bank and the ecological transition : decoupling development finance from core currency hegemony ?

Abstract

This paper investigates the role of the New Development Bank (NDB) in challenging global financial hierarchies while fostering an ecological transition. The NDB, established by the BRICS nations, has a mechanism of providing development finance in local currency, which could reduce dependency on core currencies like the dollar (USD) and euro (EUR), offering an alternative for peripheral economies to finance sustainable development. Given the institutionalization of the green economy agenda and the rise of green finance, the paper raises elements to assess whether the NDB effectively contributes to the ecological transition through its investment strategy. The analysis builds on structuralist and dependency theories, identifying three interlinked hierarchies – productive, currency, and environmental – that shape global financial asymmetries. Then, the NDB’s project portfolio from 2016 to 2024 is analysed, focusing on the interplay between the projects’ area of operation, currency of funding, and country of implementation. The findings indicate that, while the NDB has made strides in funding sustainable infrastructure, its operations remain largely embedded within dominant currency systems. Only China and, to a lesser extent, South Africa have successfully leveraged national currencies, whereas other BRICS and partner countries remain heavily reliant on core currencies. Ultimately, while the NDB represents an important step toward a multipolar financial system, its potential to drive systemic change hinges on further institutional reforms, political commitment and expanded local currency financing – which is in line with the funding trends observed in the last years of NDB’s operations.