China on Friday has formally established the Asian Infrastructure Investment Bank (AIIB) in Beijing. “The AIIB is legally established as the Articles of Agreement take effect today,” intimated China’s Minster of Finance, Lou Jiwei in Beijing.
The AIIB was formally established after 17 countries having 50.1% votes ratified it. According to the AIIB Charter, if at least 10 signatories with a combined voting strength of at least 50% ratify the Charter, the institution comes into effective.
The bank with headquarter in Beijing has 57 members at present. Chinese officials repeatedly indicated that membership will be expanded in future as important countries like Japan yet to join. Japan is the second largest economy in Asia.
At present, the leading shareholders are China, India and Russia with voting shares of 26.06%, 7.5% and 5.92% respectively.
Technically, the AIIB will become operational after the first meeting of the board of directors and executive council which is scheduled to be held from January 16 to 18. China has designated Jin Liqun as the first President of the institution.
AIIB’s official induction into the world financial order marks a remarkable event as Beijing is trying to establish’ Made in China’ institutions in a global economy which is dominated by the West.
By structure itself, the AIIB contains many non-Asian countries including UK and Germany. Though the institution is supposed to give loans to infrastructure projects in Asia, multi-continental membership indicates that it can spread activities outside Asia in no time.
If that happens, the AIIB will be the first institution challenging the Brettonwoods created World Bank and IMF.