The leaders of the five Brics countries have signed a deal to create a new $100bn (£58.3bn) development bank and emergency reserve fund.
The Brics group is made up of Brazil, Russia, India, China and South Africa.
The capital for the bank will be split equally among the five participating countries.
The bank will have a headquarters in Shanghai, China and the first president for the bank will come from India.
Brazil’s President, Dilma Rousseff, announced the creation of the bank at a Brics summit meeting in Fortaleza, Brazil on Tuesday.
At first, the bank will start off with $50bn in initial capital.
The emergency reserve fund – which was announced as a “Contingency Reserve Arrangement” – will also have $100bn, and will help developing nations avoid “short-term liquidity pressures, promote further Brics cooperation, strengthen the global financial safety net and complement existing international arrangements”.
The creation of the Brics bank will almost surely create competition for both the World Bank and other similar regional funds.
Brics nations have criticised the World Bank and the International Monetary Fund for not giving developing nations enough voting rights.
One of the goals for the bank – whose creation has been discussed for some time – would be to increase the amount of money loaned to developing countries to help with infrastructure projects.