A Short Note About Asian Infrastructure Investment Bank

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A Short Note About Asian Infrastructure Investment Bank

Oleh : Ardy Nugraha

 

Asian Infrastructure Investment Bank (AIIB) is an international financial institution (just like International Monetary Fund (IMF), Asian Development Bank (ADB), World Bank (WB), and others) which is proposed by China. The main objective for AIIB is to funding infrastructure’s project in Asian countries, especially the developing countries, but the target for the member of this institution is for the Asian Pacific region, which includes Australia. AIIB sometimes compared to the ADB, WB, and IMF, some said that China is trying to remove the domination from the developed countries, more specifically, US. China wants to become a lender country, China President Xi Jinping said for the first stage, China will inject $50 Billion to the AIIB as the first capital. That’s a lot of money, Xi Jinping also make a target that the total capital for the AIIB is $100 Billion. Not only in AIIB, China also wants to make an cheap jordans online international financial institution with the other member of BRICS (Brazil, Russian, China, India, South Africa), BRICS is an organization that consist of five emerging market countries. They want to make New Development Bank (NDB) (previously, the name of the bank is BRICS Development Bank), which has the base in Shanghai. The main objective of the NDB is to funding the BRICS’s members and others emerging market countries for infrastructure’s purpose. All of these attempts (NDB and AIIB) are clearly to remove the developed countries influence in the financial sector in the Asian and other emerging market countries. There are some impacts for the developing countries as “customers” for the loanable fund NFL Jerseys Cheap market. First, because of the increasing competition with the arrival of new institutions (but it’s still ongoing, maybe around 2020 these two institutions are ready) the market adjust with NFL Jerseys China lower interest rate, because each of the institution would try to attract more customers. Second, with the competition and the low interest rate, it Baratas Ray Ban would make some countries to borrow more but not followed by ability to pay the debt, so it would lead to crisis in the future to those who can’t pay.

The first impact of the arrival of the new international financial institution is lower interest rate. The concept is similar to the goods market where quantity is affected by the price, but in this case the price is change to interest rate. The lower the interest rate then many countries will borrow more to the one which give lower interest rate and the simplicity of the process.

The second impact of the arrival of the new international financial institution is related with the first impact, because of the lower rate many countries tend to borrow at AIIB, but if the country borrows and borrows more until the debt become so high and the money Style they borrow not used efficiently, they will face new problem, unpaid debt, because the debt is so high and failed to pay the debt. The example of the failure to pay debt is Greece’s crisis whose lead to the Europe crisis.

After view the two impact which could arise because the arrival of the new international financial institutions, I think those two development banks are not bad too, because they could bring alternative to get loan for the developing Fake Oakleys countries, but the regulation and the calculation must be planned seriously and the AIIB should monitoring the borrower carefully if the main objective not only get profit but also to build better Asian Pacific.

In conclusion, there are some impacts because of the arrival of the new international financial institution, such as lower interest rate for the loanable fund and the failure to pay the debt because of the easy credit. But, the arrival of the AIIB could be an alternative source of funding for the developing countries in the Asian Pacific.

 

 

References :

http://www.economist.com/blogs/economist-explains/2014/11/economist-explains-6 accessed on Friday, 27 February 2015

http://www.ibtimes.co.uk/china-launches-aiib-rival-world-bank-without-us-allies-after-pressure-washington-1471582 accessed on Friday, 27 February 2015

http://www.bloomberg.com/news/articles/2014-05-11/china-s-50-billion-asia-bank-snubs-japan-india-in-power-push accessed on Friday, 27 February 2015Watch Full Movie Online Streaming Online and Download

http://www.wsj.com/articles/brics-agree-to-base-development-bank-in-shanghai-1405453660 accessed on Friday, 27 February 2015

 

 

 

 


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