Current international scenario is showing a tussle amongst all nations and there is a race for power among them. Well, several groups have been framed like SCO, SAARC, G-20, etc but still there is a void between all the nations especially the developed and powerful nations like US, China and Russia. Last few years have been good for all developed nation as some new banks have emerged on the international forum. So here we are discussing about them and their effects.
Why they are required?
The first question that comes to mind is that what is the requirement of these new banks, if IMF and WB is already their serving the same task. As Asian nations have observe the Bretton Woods Twins (World Bank and IMF), Asian nations have faced reluctance in getting funds. So these banks are the need of developing nations and Asian nations to overcome the need of funds for development and infrastructural enhancement.
Is it beneficial to raise these banks?
Nations like China have aim to overcome the dependency over western powers. The step of establishing bank has both pros and cons. AIIB will support Asian nations to get funds easily, but this will increase the dominance of China over Asia as it is already showing dominance over South China Sea and eying at Indian Ocean.
NEW DEVELOPMENT BANK (NDB)
Establishment – The bank was firstly named as BRICS development bank after the name of the group which led to its birth. The agreement of its establishment was signed in Fortaleza during 6th BRICS summit last year. Its headquarter is in Shanghai, China.
Need – With the emergence of BRICS, new idea of development of bank came above new development bank. The bank aims at mobilizing resources and supporting infrastructural activities in developing nations along with reducing dependency over IMF and WB. Current shareholding in bank is equal $ 10 bn and none of the country can increase it without other members agreement.
ASIAN INFRASTRUCTURE INVESTMENT BANK (AIIB)
Establishment – China is the founder of this bank, establishing it in 2014. 21 countries signed the agreement. The aim of the bank is to reduce the dependency of Asian nation over western nations. There are 57 perspective founding members also. The bank has it’s headquarter in Beijing, China.
Need – As the name itself describes the aim, the bank is framed for supporting infrastructure in Asia- pacific areas like construction of road buildings etc in poor region of Asia. China has a vision of reducing the dependence of Asian countries over western nations. The shareholding is according to the economy of the nations. The largest shareholders of the bank are China (~20%), India (7.5%) and Russia (5.9%). The bank will initially focus on revival of silk route to give Asian nations a better trade opportunity.
On the other side, ADB was framed for development of Asia, but did not reached the expectations of Asian nations.
ASIAN DEVELOPMENT BANK (ADB)
Establishment – Established in 1966, the bank had 31 members then and now it has 67 members out of which 48 are Asian.
More – Well, the bank is Japan dominated as Japan is largest shareholder. The aim of the bank was to decrease poverty and increase development in Asia and pacific nations. But the voting scheme is according to the shareholding and thus gives power to high shareholders like US and Japan and is closely related to World Bank. ADB was also criticized for several reasons like ignoring the alerts of food crisis, not evolving in projects in Vietnam as US holds large shares, US, Japan are using their power of shares for funding and other activities etc. Well, Asia need nearly 700-800 Bn for development but ADB provided just $ 10 bn making it less interesting for Asian nations.
