Asian Infrastructure Investment Bank (AIIB)

• IAS NEXT, Lucknow
• 05, Mar 2022

Reference News:-

Asian Infrastructure Investment Bank (AIIB) has put all activities relating to Russia and Belarus on hold and under review in the wake of the current conflict in Ukraine.

• The AIIB referred to the situation as “war in Ukraine”, the closest to “invasion” that any Chinese government-affiliated institution has until now described the situation in the east European country.

Impact of such sanctions:

After years of life in a growing, globally connected economy, Russians find themselves in a country increasingly unplugged from the world.

• Following President Vladimir Putin’s invasion of Ukraine, a sweeping wave of sanctions by the European Union and the U.S. has combined with an exodus of foreign companies and investors, leaving Russia more isolated and economically restricted.
• For several days, long lines formed near ATMs around Russia as people rushed to withdraw cash — both foreign currency and rubles — amid fears of a breakdown in electronic banking.
• The value of the ruble has plummeted to a record low, less than 1 cent, as many people watched their savings erode.
• The Kremlin has banned all Russians from transferring foreign currency abroad and ordered exporters to exchange 80% of their foreign currency proceeds for rubles.
• On social media, Russian shoppers are noting early price increases for some products, particularly electronics and appliances.
• Many people in Russia who work for foreign companies have been anxious about being able to receive pay, as the first batch of key Russian banks has been booted from the interbank SWIFT system to target oil and gas profits.
• International artists and cultural organizations have also imposed their own restrictions.
• Impact on oil prices: Russia is not only the world’s third biggest oil (after the US and Saudi Arabia) and the second biggest natural gas (after the US) producer, besides the No. 3 coal exporter (behind Australia and Indonesia). It is also the second largest exporter of wheat.

What is AIIB?

Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank with a mission to improve social and economic outcomes in Asia and beyond.

The Parties (57 founding members) to agreement comprise the Membership of the Bank.

• It is headquartered in Beijing.
• The bank started operation after the agreement entered into force on 25 December 2015, after ratifications were received from 10 member states holding a total number of 50% of the initial subscriptions of the Authorized Capital Stock.

Aim:

By investing in sustainable infrastructure and other productive sectors today, it aims to connect people, services and markets that over time will impact the lives of billions and build a better future. 

Membership:

• There are more than 100 members now.

Voting Rights:

• China is the largest shareholder with 26.61 % voting shares in the bank followed by India (7.6%), Russia (6.01%) and Germany (4.2 %).
• The regional members hold 75% of the total voting power in the Bank.

Various organs of AIIB:

• Board of Governors: The Board of Governors consists of one Governor and one Alternate Governor appointed by each member country. Governors and Alternate Governors serve at the pleasure of the appointing member.
• Board of Directors: Non-resident Board of Directors is responsible for the direction of the Bank’s general operations, exercising all powers delegated to it by the Board of Governors.
• International Advisory Panel: The Bank has established an International Advisory Panel (IAP) to support the President and Senior Management on the Bank’s strategies and policies as well as on general operational issues.