AIIB needs to be reckoned with

The fact that so little is written about the Chinese-backed Asian Infrastructure Investment Bank here in the US, speaks volumes on its importance outside of the borders.

The AIIB has buy in by NATO and SEATO members, which is very impressive from the Chinese perspective. With a geographical span that is far larger than any other international organization and the backing of the City of London financial institutions, the AIIB in very short order could make the World Bank and the IMF second-rate players in development lending across the globe.

While many currency traders suggest that the renminbi is no threat to the dollar as a global currency — since there are no true derivative markets trading in the currency — should look to London and its huge liquidity in derivatives as the solution for the AIIB. London banks gladly welcomed working with the AIIB to finance all its needs.

The US has no answer to the AIIB except to say that the Asian Development Bank already does the same funding. Yes in dollars it does, which is why China, Russia (although not a founding member) and India see the need to fund in the coming years hundreds of trillions of yuan into pan-Asian projects in local currency without paying the vig to the west.

As a simple example of the AIIB’s influence in the coming years, how long will it be before the AIIB tells OPEC to sell its oil in yuan to its member states? It could easily get its oil from Russia once the Pan-Asian pipeline is built, if it doesn’t like the answer.


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