Asian Infrastructure Investment Bank (AIIB) set up
October 29, 2014 Category Finance, Weekly
21 Asian nations signed a memorandum of understanding (MOU) in the Great Hall of the People in Beijing to create a new international bank. The Asian Infrastructure Investment Bank (AIIB) – with an initial capital of USD50 billion, to be expanded to USD100 billion – aims to fund the construction of roads, railways, power plants and telecommunications networks. Beijing will be the host city for the AIIB’s headquarters. It is expected that the AIIB will be formally established by the end of 2015. Chinese President Xi Jinping proposed the bank a year ago at a gathering of Asia-Pacific nations. China has said it will provide most if not all of the initial USD50 billion in capital. Private institutional lenders are expected to provide another USD50 billion. The Asian Development Bank (ADB) estimates developing Asian countries will need to invest USD8 trillion in infrastructure from 2010 to 2020 just to keep their economies moving forward, only a tiny fraction of which can be provided by the ADB. President Xi said that all countries with interest are welcome to join the bank. But major economies including Australia, South Korea and Indonesia were absent from the signing. China also is backing another USD50 billion-lending institution, the New Development Bank, sponsored by the BRICS countries.
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