Wednesday, May 27, 2015

BRICSPOST: AIIB Members Meet to Discuss Share Holding

Members of the new China led AIIB (Asian Infrastructure Investment Bank) met recently to discuss how much of a stake the various members will own in the new bank. An article in the BRICSPOST lays out the details from the meeting. Below are a few quotes from the article, then a few comments.


"The $100 billion Asian Infrastructure Investment Bank’s 5th Chief Negotiators’ meeting has ended in Singapore on Friday.
Delegates and representatives from 57 countries which had joined the China-led Bank as founding members have discussed stake-holding, draft of articles and shares in the newly found lender.
China’s Ministry of Finance said on Friday the negotiators have reached agreement on the bank’s charter.
Preparation for establishment of the AIIB are gaining momentum as a succession of intensive talks are on the horizon.
With the signing of a charter slated for the end of June, the AIIB looks set to be launched by the end of the year.
AIIB on Wednesday held a three-day closed-door meeting in Singapore, co-chaired by China’s vice Minister of Finance Shi Yaobin and Singapore’s Deputy Secretary of the Ministry of Finance Yee Ping Yi.
A Reuters report on Friday quoted unnamed sources as saying China would hold 25-30 per cent of shares, India 10-15 per cent, Asian countries will own between 72-75 per cent of the bank’s shares."
. . . . . 
"China, with $4 trillion in foreign exchange reserves, is pushing for the growth of its own multilateral bodies, including the AIIB, the BRICS Bank and a bank for the Shanghai Cooperation Organization, but also seeking to strengthen its voice at the World Bank and the International Monetary Fund.
To reflect the growing and underrepresented influence of emerging economies, the IMF called for a 6 per cent shift in quota share to the emerging economies in 2010. However, the reform has been delayed for five years due to blocking by US Congress as the United States retains a veto.
“I can fully understand why some other countries are frustrated and impatient to see that reform implemented,” IMF chief Christine Lagarde said last month calling on the United States to ratify the quota reform plan."

My added comments:

No new surprises here. It was expected that China would own the largest interest in this new investment bank. Once again this article does not suggest that China or any BRICS nation intends to leave the IMF. Instead it says China is "seeking to strengthen its voice at the World Bank and the International Monetary Fund".

So far the US and Japan are still not members although China says they are welcome. Note also that the bank is not going to be ready to startup until the end of this year. We will know what the IMF decides on adding the Yuan to the SDR basket before then.

Added note: China Daily runs this article on the new AIIB. It does add that Japan is planning a $110 billion Asian infrastructure investment program of its own. It also says Japan is keeping open the possibility of joining the AIIB.

One other thought: When all this new infrastructure investment money starts getting spent, we will likely see a renewed strain on commodity supplies. This much building requires a lot of raw materials and energy. It should also boost industrial demand for silver. If you add up the BRICS Bank, the AIIB, and this new program from Japan you get well over $300 billion in available investment capital just for projects in Asia. That is on top of the World Bank and other existing sources of capital.

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