Facts History China starts AIIB Bank challenging World Bank, ADB and IMF

Facts History China starts AIIB Bank challenging World Bank, ADB and IMF

China world’s second-largest economy and does not control any world bank.

China’s proposed $50 billion Asian Infrastructure Investment Bank (AIIB) is seen as a challenge to the World Bank and Asian Development Bank and IMF.

India along with 20 other countries on Friday signed an agreement to become founding members of the China-backed Asian Infrastructure Investment Bank (AIIB) to aid the infrastructure development in the Asian region

The MoU specifies that the authorized capital of AIIB is $100 billion and the initial subscribed capital is expected to be around $50 billion.
The paid-in ratio will be 20 per cent.

Voting rights are to be decided after consultations among the members over fixing the bench marks which were expected to be combination of GDP and Purchasing Power Parity (PPP).

Based on this formula, India will be second-largest shareholder of the bank after China.
But what India will do when  number 3 or 4 will support China


World Bank and Asian Development Bank China got limited power, limited voting rights.

The ADB, created in 1966, offers grants and below-market interest rates on loans to poor countries.

At the end of 2013, its financing operations amounted to $21.02 billion.

China has a 6% stake in the ADB, and the major shareholdings are held by the United States and Japan.

With this new bank China will get more rights and it will slowly start to dominate the poor countries of Asia by giving them loans

China is set to be its largest shareholder with a stake of up to 50%.

The AIIB, launched in Beijing at a ceremony attended by Chinese finance Minister Lou Jiwei and delegates from 21 countries including India, Thailand and Malaysia.

Which Countries were not present and which may not support the bank?
Indonesia, where President Xi Jinping first spoke of the AIIB during an October visit last year, was not present and neither were South Korea and Australia

What is the Aim of the AIIB?
To give project loans to developing nations.

When will bank starts its operations?

The Bank, to be headquartered in Beijing, is expected to be operational by next year.

The AIIB is expected to begin operations in 2015 with Chinese banker Jin Liqun, ex-chairman of investment bank China International Capital Corp, expected to take a leading role.

It will be interesting to see that what Bank will do so that the loans will not be used to pay the corruption money and bribes or do the low quality work and cheat the citizens of poor countries.

Time to time one reads that World Bank punished this company and that company

What AIIB will do in such situations?

Death punishment as per China laws, it will be good idea

Black list a company permanently forever if do the corruption using the bank money.

History of AIIB

In June 2014 China proposed doubling the registered capital of the bank from 50bn USD to 100bn USD and invited India to participate in the founding the bank

On October 24th, a signing ceremony held in Beijing, formally recognized the establishment of the bank.

Following countries signed the bill, which included:
China,
Bangladesh,
Indonesia,
Malaysia,
Philippines,
Singapore,
Thailand,
Brunei,
Cambodia,
Laos,
Myanmar,
Vietnam,
India,
Mongolia,
Pakistan,
Sri Lanka,
Nepal,
Kazakhstan,
Uzbekistan,
Kuwait,
Oman
Qatar

The initial US$50 billion was mostly provided by China

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Saturday, October 25, 2014

Tags – China Bank AIIB Vote Facts History