Corliss Online Financial Mag: Japan, Australia May Join China-Led Bank

Japan signaled that it could join the Asian Infrastructure Investment Bank

(AIIB) after all if certain conditions were met satisfactorily.

This is despite the United States already expressing concerns regarding AIIB

and its capability to pass social and environmental standards and China's

already growing diplomatic influence in the region. Still, about 30 nations,

including major EU members, participated in this economic project.

Now, even the notable allies of the US -- South Korea, Australia and Japan --

are reportedly reconsidering.

Japan's Finance Minister Taro Aso announced that they are considering

joining the AIIB if they can confirm that it has a "credible mechanism for

providing loans". However, other Japanese senior officials remain doubtful if

participating in a China-led bank could be truly advantageous.

"We have been asking to ensure debt sustainability taking into account its

impact on environment and society. We could (consider) if these issues are

guaranteed. We'll give it careful consideration from diplomatic and economics

viewpoints. There could be a chance that we would go inside and discuss. But

so far we have not heard any responses," commented Aso.

AIIB is also seen as a competitor of ADB (Asian Development Bank) which is a

regional financial institution based in the Philippines. It is basically dominated

by the US and Japan, with its leader customarily coming from the latter's

finance ministry or the Bank of Japan.

The former president of ADB and current BOJ Governor Haruhiko Kuroda

cautiously said, "There are huge needs, demands for infrastructure investment

in Asia. On the other hand, the World Bank and ADB have been helping

countries in Asia to improve infrastructure for the last 50 years."

Despite being a China-led financial institution that the US is warning against,

AIIB got Tokyo concerned of missing out on opportunity for more regional

participation, reports Corliss Online Financial Mag.

Meanwhile, Australia's Treasurer Joe Hockey said participating in AIIB has the

potential to benefit local companies and should not adversely affect their

relationship with the US. At any rate, he added that a final decision has yet to

be made, although Corliss Online Financial Mag got reports that Australia

could decide to formally join this week with as much as USD 2.3 billion in

investment.

"There is a lot of merit in it, but we want to make sure there are proper

governance procedures. That there's transparency, that no one country is able

to control the entity. And because it's operating in our region, in our

neighbourhood, it is important that Australia fully understand and look at

participating in this Bank," said Hockey.

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