Asian Infrastructure Investment Bank (AIIB)

Asian Infrastructure Investment Bank (AIIB)

– In Oct 2013 Chinese president announced plan for new bank called as Asian Infrastructure Investment Bank
– It will have a capital of $100 billion
– 22 Signatory states
– Members - Vietnam, Uzbekistan, Thailand, Sri Lanka, Singapore, Qatar, Oman, the Philippines, Pakistan, Nepal, Bangladesh, Brunei, Cambodia, Kazakhstan, Kuwait, Lao PDR, Malaysia, Mongolia and Myanmar, Indonesia
– Headquarters – Beijing
– Australia and South Korea did not join under pressure from US.
– Japan, Bhutan, Tajikistan and Kyrgyzstan also did not join
– China will contribute $50 billion
– Voting power is according to share holding but china said once new member joined shareholding will be decided by GDP adjusted for PPP.


Provide finances to infrastructure projects of developing nations in Asia pacific region

Why new bank?

-For development along the ancient “silk route” free from the influence of western-backed lenders such as the World Bank and the Asian Development Bank (ADB).
– Global finance institutions dominated by US does not show desire to reform existing system to incorporate shifting economic base to Asia.
– Asian Development Bank is largely dominated by Japan which also has discriminating voting system which dose not reflect Chinese economic might.
– ADB can lend only $10 billion a year which is far less as according to one estimation $ 800 are required for infrastructure development in Asia
– China has huge foreign currency reserves that it can utilize by reinvesting in infrastructure projects.
– China is funding many infrastructure projects. By establishing bank it will legitimize the funding
– It will give boost to Chinese Silk road policy.
– China can assert its role of superpower by creating parallel financial institutes.

For India

– India already requires funding for its infrastructure projects. It will get benefit from the bank.
– Also India will be second largest share holder offering considerable voting power.
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