AIIB Portents Significant Impact on Global Financial Governance

Abstract

The creation of the Asian Infrastructure Development Bank (AIIB) understandably grabbed attention throughout the world. The initial response in the US, Japan and some other countries was to view it as a challenge to the post-World War II Bretton Woods order. Many saw it as an attempt by the Chinese to create an alternative institution after having failed to gain greater traction for reform of the existing system of international financial institutions. At the same time, many others see the AIIB as a major event in the history of international financial development with many positive implications for promoting global financial governance. As a Multilateral Development Bank (MDB), AIIB focuses on infrastructure investment in Asia and attempts to construct new mechanisms for international cooperation. It will undoubtedly push for reforms in global financial governance in terms of financial rule-making and loan allocations, and enhance regional financial integration in East Asia.