Asian Infrastructure Development Bank able to compete with biggest financial institutions

 
 
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Feb. 2, 2016 - PRLog -- The Asian Infrastructure Investment Bank (AIIB), which officially opened for business on 16 January 2016 in Beijing with participation of representatives from the 57 member countries, will be able to strongly compete with the International Monetary Fund (IMF), the World Bank (WB), the European Bank for Reconstruction and Development (EBRD) and even the Asian Development Bank (ADB) in the future, the foreign media quote experts and economists.

Some of them say the emergence of a new international institution with the authorized capital stock of $100 billion, which seeks to overcome infrastructure deficit in Asian countries, was triggered by the US authorities, who now express displeasure over the very idea behind the alternative financial center.

As media reports note, the decision to create the AIIB came forth when the United States refused to ratify a series of slight changes to the governance of the International Monetary Fund that would redistribute quotas and increase the representation of China and other Asian countries at the IMF corporate management.

As the result, in October 2013, the Chinese President Xi Jinping and the Premier of the State Council of the People’s Republic of China Li Keqiang announced the AIIB initiative in October 2013. A year later, China together with 21 countries signed a memorandum of understanding, and soon after, on 29 June 2015, representatives from the 57 founding countries signed the establishment agreement.

According to Jin Liqun, President of the AIIB, former Vice Minister of Finance of the PRC, originally the initiative was met with doubts by many, but the attitude changed later on, and currently, China is in the process of gaining credibility and building up mutual trust by collective consultation and making decisions based on democratic approaches.

However, China, while being the organization’s largest shareholder, has no plans to exercise its veto power or expand its vote share, which, as Jin Liqun adds, is a major contrast to the World Bank, in which the United States “has maintained its veto power by amending the articles of agreement.”

“The new lender will set itself apart from other similar institutions,” stresses the AIIB President, adding that transparency, openness, independence and accountability will be the institution’s main principles of work.

The launch of the AIIB already forced some existing international banking institutions to review their activities in the Asia-Pacific region, says Tran Viet Thai, deputy director for the Institute for Foreign Policy and Strategic Studies at the Diplomatic Academy of Vietnam.

“For example, the Asian Development Bank is already in the process of restructuring its infrastructure loans to focus on other lucrative ones. […] Even more than that, I already see competition between AIIB and ADB in Asia, especially in infrastructure projects in the region,” the analyst stressed.

At the same time, he reminded that the organizations such as WB, IMF, EBRD and ADB have been functioning for several decades, and the AIIB will need to go to great lengths to compete with them on the same level.

“I do hope that in the long run, these institutions can share the same international standards, can cooperate with each other to provide the best products for its customers,” the expert said.

In his opinion, the AIIB will encounter no significant hindrances and will find its own niche among other financial organizations.

Full text news agency "PenzaNews": http://penzanews.ru/en/opinion/60695-2016
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