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22 Global Governance 11 (2016)
Asian Infrastructure Investment Bank: Governance Innovation and Prospects

handle is hein.journals/glogo22 and id is 13 raw text is: Global Governance 22 (2016), 11-26 THE GLOBAL FORUM Asian Infrastructure Investment Bank: Governance Innovation and Prospects Gregory T Chin ON 29 JUNE 2015, THE LEADERS OF CHINA AND REPRESENTATIVES OF FIFTY-SIX nations gathered in Beijing to sign the Memorandum of Understanding for the creation of the Asian Infrastructure Investment Bank (AIIB). According to its Articles of Agreement, the purpose of the bank is: first, to foster sustainable economic development, create wealth and improve infrastructure connectivity in Asia by investing in infrastructure and other productive sectors; and, sec- ond, promote regional cooperation and partnership in addressing develop- ment challenges by working in close collaboration with other multilateral and bilateral development institutions. The creation of this new bank is the latest in a wave of new global initiatives that China has promoted, alongside the Group of 20 Leaders Suniunits (G-20); the internationalization of the renminbi (China's national currency); the New Development Bank (NDB) of the BRICS grouping (Brazil, Russia, India, China, and South Africa); and the Silk Road Economic Belt and Twenty-first Century Maritime Silk Road (One Belt & One Road). The AIIB will be headquartered in Beijing, with an initial capital stock of $100 billion. China is contributing the largest share for the new bank, by a large measure ($29.8 billion). According to its fifty-seven founding mem- bers, the AIIB grew from the recognition of the importance of infrastructure to the development of Asia, and the need for significant additional long-term financing for infrastructure and development in the region and beyond the re- gion.1 The other motivation is that China and many developing countries have grown frustrated with what they perceive as the often slow and overly bu- reaucratic ways of the traditional lenders and their slow pace of representa- tional and operational reform.2 The fact that it has been a quarter-century since the last major multilateral development bank was created (the European Bank for Reconstruction and Development, founded in 1991),3 and that the new bank is championed by China (and not by the traditional Western powers or Japan), signals a shift in the balance of world economic power. The lack of precedence of the People's Republic sitting at the center of the table, setting the agenda, defining priori- ties, and rethinking rules means that rules could emerge in the AIIB-funded projects that differ from those of the liberal international economic order. That 11

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