Global lenders the World Bank and the International Monetary Fund (IMF) have welcomed the proposed China-led Asian Infrastructure Investment Bank (AIIB) and said that they will closely cooperate with the new financial institution.
"Any new initiative that will mobilize funding in order to fill infrastructure gap is certainly welcome. World Bank really welcomes the AIIB initiative," the bank's managing director Mulyani Indrawati said yesterday in an exclusive interview with Chinese business daily Xinhua.
Allaying fears that the new bank will be a competitor to the World Bank, the IMF or existing regional development banks, Indrawati said that the global need of infrastructure is huge and the market is large enough.
Asia's infrastructure needs are estimated to be about $3 trillion.
"What's important is whether you are going to be able to match the funding with the need of infrastructure," said Indrawati.
"We will definitely open for cooperation with AIIB. Even now, we are working very closely in the beginning and looking at the setting, principle and framework of this institution," she said.
Indrawati said that World Bank will work to support and make sure that AIIB can live up to the expectation of many countries in the world who really want to see infrastructure to develop in a better and sustainable way.
"By working with us, it's going to show and prove that they (AIIB) are adopting the same principle like other international institutions, for example, like World Bank," she said.
In a similar development, the IMF also has welcomed the Chinese move.
The lender's managing director Christine Lagarde, who is in Beijing attending the China Development Forum's annual meeting, said that the IMF will be ''delighted'' to cooperate with the AIIB, adding that there is ''massive'' room for IMF cooperation with the institution on infrastructure financing.
AIIB was created by 21 Asian countries including India in October 2014 with a capital of $50 billion, and the membership is increasing.
The proposed financial institution aims to provide funding for infrastructure projects in the Asian region. This will include construction of roads, railways, ports, telecommunication infrastructure and others. The new bank is expected to become operational by the end of the year.
Despite strong criticism from the US who sees the new bank as a rival to the World Bank, its key ally the UK has applied recently to join as a founding member of the AIIB, followed by France, Italy, Luxembourg and Switzerland. (See: Major US allies set to join China-led global lender)
Japan, another key US ally, has been maintaining a cautious approach. The country's finance minister Taro Aso said over the weekend for the first time that Tokyo could be part of the AIIB if it can guarantee a credible mechanism for providing loans.
However, other top officials are concerned over whether the new institution would help or hinder the national interests.
Australia, which initially resisted joining the China-led initiative, has now changed its stance and has signaled that it could join the AIIB. South Korea is also likely to join the new Asian lender.