AIIB Will Use US Dollar as its Main Currency

On his twitter feed Willem Middelkoop alerts us to a new interview done by David Marsh of the OMFIF. The interview is with the President of the new AIIB (Asian Infrastructure Investment Bank). The interview covers several key topics and confirms that the AIIB will use the US dollar as it main currency of issuance. Below are some quotes from the interview.

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AIIB chief pledges ‘world-class charter’

Jin says non-resident board structure ‘ensures efficiency’

By David Marsh

Jin Liqun, designated president of the Asian Infrastructure Investment Bank, has pledged a ‘world-class charter’ to govern the China-led multilateral development bank, in a clear bid to bring waverers such as the US and Japan into the currently 57-strong shareholding structure after the bank builds up operations from next year.

Jin told OMFIF in an interview that the bank, expected to start lending in 2016, is already in contact on future co-operation with the World Bank, Asian Development Bank, European Investment Bank, European Bank for Reconstruction and Development and Germany’s public sector lender KfW.

Jin, at present secretary-general of the AIIB’s pre-start up multilateral interim secretariat, indicated the main areas of activity would be in the energy, transport, and water/urban sectors, but said it would be open to all areas of infrastructure. In a policy expected to set an important yardstick for other multilateral financial institutions, he strongly backed the bank’s non-resident board structure as efficient and cost-effective. He confirmed the bank’s unit of account and main currency of issuance would be the dollar.

Here is the OMFIF-Jin interview in full:

Click here to read the full interview

note: David Marsh is Managing Director of OMFIF. Willem Middelkoop is on the OMFIF Advisory Board
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My added comments: 

Here again we see evidence that monetary system change tends to move slowly. Despite the fact that the BRICS nations and China have expressed a clear desire to move away from the US dollar as the sole global reserve currency, they still plan to make it the main currency for the AIIB. This supports the US dollar in its role as sole global reserve currency and does not promote any kind of major change. Also, notice that using the SDR at the AIIB was ruled out as well. Again, this promotes no major change from the status quo.

Added note: China announces formal ratification of the AIIB today.