At least 50 countries of the world, including Pakistan, have formally signed up for the membership of China-led Asian Infrastructure Investment Bank. The move is a leap towards a new financial world order as the bank is being seen as a potential rival of the World Bank and Asian Development Bank. Australia is the first country to sign the articles of association to create legal framework of the bank at a ceremony in Beijing’s Great Hall of the People, and seven more are expected to do so by the end of the year. Reports suggest that the bank will have a share capital of $100 billion, with $20 billion paid in initially and Chinese President Xi Jinping puts the signing of the document as an embodiment of the concrete action and efforts made by the founding members in the spirit of solidarity, openness, inclusion and co-operation.
The United States and Japan – the two leading economies of the world — have refused to join the bank. China will lead the bank with 30 percent shares followed by India with 8.4 percent and Russia with 6.5 percent shares. The establishment of the bank is a big breakthrough in the world financial order and it will break the monopoly of the International Monetary Fund which is awaiting long-term reforms to offer developing nations a greater say in its affairs. The integral part of the infrastructure bank is that it gives larger voice to the smaller members. According to Chinese government officials, their country does not pursuing veto power in the bank affairs. They say that China has large share percentages which could be diluted by future new admissions. With regard to non-Asian members of the bank, Germany is the largest shareholder with 4.5 percent, followed by France with 3.4 percent and Brazil on 3.2 percent. The articles of association make it clear that the bank’s president must come from the Asian region and will serve a maximum of two consecutive five-year terms. The bank is likely to go into operation this year and its headquarters will be in Beijing, despite calls from Indonesia that it be based in Jakarta. The working language of the bank will be English and all financial terms in US dollar.
Though many countries including, Denmark, Kuwait, Malaysia, Philippines, Poland, South Africa and Thailand, have to sign the document, transparency of the lender will remain a major area of concern as well as the ability of the Beijing to use the bank for its own interest. However, the bank will break the myth of the western dominated financial institutions which have become colonialists of the modern era.