By Ibrahim Patel
Total 57 Countries led by China, India and Australia, consisting of most of Asian countries, has set up Asian Infrastructure Investment Bank (AIIB) with Billions of Dollars funding this week. With the establishment of the Bank, it has paved the way for starting single Asian currency similar to single currency of 19 countries of European Union i.e. Euro. Australian economist Mr. Clifford Bennett said that set up of the new bank is possible, which will prompt Asian currency similar to the Euro within the next decade. Many people have criticized the euro, however, it is important to note that although passing through numerous crisis, the existence of the Euro is still retained.
If single currency has been established in Asia, it can help to prevent our currency upheaval. Iron ore, copper, or any of our commodity marketing deal with a single currency to achieve and maintain economic stability. Mr. Clifford Bennett said that the establishment of the AIIB, with 130 Billion Dollars fund may be helpful in getting a loan easily for the set up of projects of Railway or Telecommunications infrastructure, but this is a big challenge. In the Asian region, especially in India and the world's second biggest economy, China are fast developing economies. There is now a new infrastructure is needed to boost the productivity.
It has been estimated that there will be 10 Trillion Dollar infrastructure investment needs in the Asia-Pacific region. Forecaster of Oxford Economics, said that By the year 2025, infrastructure investment in the area will need 60 % share. Only China and India may need more than 33% of the share. Another economist has indicated that Shifting of global power has been started. Although China is the world's second largest economy, but its influence has increased in the International Financial institutions.
China wants 30 percent of the voting power in AIIB. China’s share in Financial institutions like the IMF and World Bank are little less than 5 percent, while the Asian Development Bank has 5.5 % share. With Capital Fund of $ 130 billion, China may lend a 50 per cent stake in it. Together 57 countries worldwide met last week to prepare a list of the countries as founding members, with two countries were against the plan. United States shown protest as Asian countries, including Japan got ready to join in this plan. USA has raised the issues like environment, labor issues and transparency.
Membership to Taiwan has been denied as it involved a dispute with China. The bank will benefit to Asian Knowledge infrastructure. Foreign companies such as the Australian will have the opportunity to receive a contract by participating in Bidding for contracts. Although AIIB will work throughout Asia, Australia has agreed to become a shareholder of the Comprehensive Economic Region. Thus, even if it was having the aim of infrastructure development, the establishment of the fund has a large stake of China. So the establishment of the bank with a $ 4 Trillion in foreign reserve holdings of the fund will be established. The bank will start working later this year.
[Courtesy - www.commoditydna.com]
Ibrahim Patel is well-experienced commodity & currency expert. He has writing experience in the field since 35 years. He is working in Sandesh Gujarati newspaper and also editor of www.commoditydna.com. He had vast experience in analysis of trends in comodity markets in Vyapar, a commercial newspaper from Mumbai.[/vc_column_text][/vc_column][/vc_row]