The View | AIIB not a threat to World Bank
AIIB will certainly boost China's clout on the global stage, but it doesn't pose any challenge to the World Bank as they serve different purposes
America is a nation built on promises. And nothing peeves a nation built on the expectation of greatness and exceptionalism than another emerging superpower offering a new kind of promise and hope to the world.
The Asian Infrastructure Investment Bank has caused more than a ripple in Washington and multilateral banking circles. As a former officer of the World Bank group, I believe that while economic history is being made, there is still much uncertainty surrounding its future. Just as the European Union and the euro were in large part a reaction to US trade and financial hegemony, the emergence of the AIIB represents China's natural ambition to define its role as a superpower.
It is no surprise that the AIIB's early, non-Asian members were Britain and Luxembourg. Both of them shrewdly and pragmatically needed to defend their financial service industries by looking beyond the US.
China's massive economy is reflected in the yuan's emergence as a global trading currency and its ambition to become a reserve currency. By the sheer weight of the country's trade and investment flows, the world's reserve currencies will eventually be rebalanced more equally among the US dollar, euro and yuan. China's own multilateral institution is a step towards freeing the yuan from the dollar's influence.
The global financial crisis and the distortions in world economies caused by US policies and extraterritorial regulatory intrusions have forced the rest of the world to pay for a crisis that was purely an American subprime disaster inflicted by American banks. Diversifying and reducing the dependency on the dollar will confine America's next financial crisis to its own shores, forcing it to pay with a weakening of the dollar and a drastic reduction in its standard of living.