The president of the World Bank said on Friday he welcomed the setting up of the China-backed Asian Infrastructure Investment Bank (AIIB), a day after Britain became the first Western nation to embrace the institution.
With U.S. interest rates likely to rise later this year, capital flows to emerging markets and low-income countries will face greater challenges over time, Jim Yong Kim told a news conference.
“From the perspective simply of the need for more infrastructure spending, there’s no doubt that from our perspective, we welcome the entry of the Asian Infrastructure Investment Bank,” he said.
The AIIB was launched in Beijing last year and was seen as a rival to the Western-dominated World and Asian Development Bank. The United States has questioned whether it will have sufficiently high standards on governance and environmental and social safeguards.
Kim’s remarks came after Britain said it has sought to become a founding member of the AIIB.
“As the U.K. just announced today in their statement, they were very clear in saying that they were going to insist that the standards of any new bank that they are part of would be equal to the World Bank and the Asian Development Bank,” Kim said.
All of the multilateral development banks together contribute only about 5 to 10 percent of the overall annual spending in infrastructure, he added.
The AIIB was launched in Beijing last year to spur investment in Asia in transportation, energy, telecommunications and other infrastructure.
China said earlier this year a total of 26 countries are founder members, mostly from Asia and the Middle East.
Japan, Australia and South Korea are the other notable absentees in the region. Japan, China’s main regional rival, has the highest shareholding in the Asian Development Bank along with the United States, while Australian media said Washington put pressure on Canberra to stay out.
Vice Finance Minister Joo Hyung-hwan told reporters on Thursday that South Korea was still in discussions with China and other countries about its possible participation.