New York: A formers IMF official has welcomed addition of Asian Infrastructure Investment Bank (AIIB).
“Institutions like the Asian Infrastructure Investment Bank (AIIB) are very useful addition to the existing multilateral institutions and beneficial to global governance,” said a former International Monetary Fund (IMF) official in an exclusive interview with a Chinese news agency recently.
Eswar Prasad, the former head of the IMF’s China Division, said there will be a lot of discussions about how China and other Asian countries are joining together to create these new multilateral institutions in the upcoming Asia-Pacific Economic Cooperation ( APEC) meeting to be held in Beijing early November.
Twenty-first Asian countries last Friday in Beijing signed the Memorandum of Understanding on Establishing AIIB which will be an inter-governmental regional development institution in Asia with Beijing to be the host city for its headquarters. “Some economies like the US certainly feel a little threatened that their place in the global economic order is going to be threatened, but my personal views is that this is good for the global governance,” argued Prasad, professor of trade policy at Cornell University based in Ithaca, New York. In his view, the more competition there is among international institutions like the IMF and the World Bank, the better it is for international governance. The professor noted institutions like the AIIB can play a very useful role in terms of intermediating finance since many economies in the Asia-Pacific region face a common big question that is how to get financing for infrastructure projects.
“Infrastructure investment is fairly obvious that if you do it the right way, especially under these cheap financing conditions, there are going to be very significant short-term and long-term growth benefits,” said Prasad who is also a Senior Fellow at the Brookings Institution, a Washington-based think tank, where he holds the New Century Chair in International Economics. Meanwhile, he raised a question about the AIIB that is details haven’t yet been unveiled with regards to the new institution’s governance mechanism and safeguards. .
