The Asian Development Bank Institute (ADBI) published a report in 2010 pointing out that the Asia-Pacific region requires approx. USD 8 trillion from 2010 to 2020 for its infrastructure and economic development. For the very purpose of development, Chinese government has proposed Asia Infrastructure Investment Bank (AIIB), which will look after the developmental requirements specifically for this region.
The other international financial institutions, like World Bank, International Monetary Fund (IMF) and Asian Development Bank (ADB) – are dominated by US, Europe and Japan (according to China) with their own interests. Also, the long demanded (by developing countries, like BRICS nations) voting rights and quota reform has been pending in IMF, which also helped in the creation of an alternate solution.
Therefore, China proposed the bank (AIIB) with authorized capital of USD 100 billion , with initial subscribed capital of USD 50 billion
Establishment and Member countries
A signing ceremony was held in Beijing on October 24, 2014, where 21 countries signed the bill for establishment of the bank –
China, India, Thailand, Malaysia, Singapore, Pakistan, Bangladesh, Philippines, Brunei, Kazakhstan, Kuwait, Cambodia, Laos, Myanmar, Nepal, Vietnam, Mongolia, Oman, Qatar, Sri Lanka and Uzbekistan.
In 2015, more countries have joined – Jordan, New Zealand, Saudi Arabia, Tajikistan, United Kingdom (UK), etc.
China’s Finance Ministry said, “any country that signs and ratifies the articles can still officially become a ‘founding’ member”, though they need to be accepted by the existing members first. In that sense, all the signatories before March 31, 2015 deadline will be considered as “founding” members.
India in AIIB
Smt. Usha Titus, Joint Secretary of Economic Affairs division of Ministry of Finance, signed the MoU on behalf of India at the signing ceremony on October 24, 2014.
Secretary-General of AIIB
China’s Vice Finance Minister Jin Liqun has been appointed as the Secretary General of Asia Infrastructure Investment Bank (AIIB).
Headquarter of AIIB
The bank is to be headquartered in Beijing, China, and is to be operational from end of 2015.
Note the bank will be backed by China, as it will hold the majority stake of the bank.
The AIIB will have voting rights based on benchmarks, which will be a combination of GDP and Purchasing Power Parity (PPP). Based on these China and India will be the largest stakeholders of the bank.
US pressure on some states
However, due to the pressure of USA, some countries like Australia, South Korea and Japan are yet to join the bank.