AIIB as a Strategic Counterbalance for Western Financial Institutions

Abstract

The Asian Infrastructure Investment Bank (AIIB) is a new international financial institution set up in 2015 with the goal of supporting the construction of infrastructure in the Asia-Pacific region. Meanwhile, the International Monetary Fund (IMF) and the World Bank (WB) were formed together in Bretton Woods, New Hampshire in July 1944. Both are set up to support the world economy, although each has different roles. The role of the International Monetary Fund is to protect the monetary system. Meanwhile, the World Bank plays a role in economic development. Although the size and potential of the AIIB is smaller, it is not so different from the IMF and the WB. Thus, the AIIB is considered a competitor of the IMF and WB and will bring challenges to the existence of the Bretton Woods system with the two leading WB and IMF financial institutions. In addition, according to expert opinion, the AIIB does not have austerity policies such as IMF, so the AIIB will quickly take over many sectors in the economy outside Asia as well as Europe, especially Eastern Europe. This will alleviate the importance, scale and potential of the two largest financial institutions in the world, the IMF and WB.