16.12         ndian    onom
          (b) Their disenchantment with the Bretton               The BRICS-sponsored development bank
               Woods institutions has been growing           is not an isolated and unique initiative. Similar
               over the years.                               initiatives had sprung up in the past to blunt the
           Two statements of the Fortaleza Declaration       might of Bretton-Woods twin. Development Bank
     make the situation more clear—                          of Latin America (created by Andean nations) in the
           (i) “We are confronted with persistent            1960s, the Chiang Mai Initiative in early 2000s (of
               political instability and conflict in various 10 ASEAN nations plus China, South Korea and
               global hotspots and non-conventional          Japan) to establish a network of bilateral currency
               emerging threats. On the other hand,          swap pacts in the wake of Asian currency crisis, and
               international governance structures           the establishment of the Bank of South by Latin
               designed within a different power             American countries in 2009 were the result of
               configuration show increasingly evident       escalating dissatisfaction with the US-dominated
               signs of losing legitimacy and effectiveness, IMF and World Bank.
               as transitional and ad hoc arrangements
               become increasingly prevalent, often at           aSIan InFraStruCture InveStMent
               the expense of multilateralism.”                  Bank
          (ii) “We believe the BRICS are an important
                                                             The AIIB (Asian Infrastructure Investment Bank)
               force for incremental change and reform
                                                             was first proposed by the Chinese President Xi
               of current institutions towards more
                                                             Jinping in October 2013. A year later, at its official
               representative and equitable governance,
                                                             launch in Beijing, 21 Asian nations, including
               capable of generating more inclusive
                                                             China, had signed up to be the foundation
               global growth and fostering a stable,
                                                             members. Currently another 21 nations—
               peaceful and prosperous world.”
                                                             including Australia, the United Kingdom, New
           The BRICS bank development comes at a time        Zealand, Germany and France—have expressed
     when reforms at the Bretton Woods institutions          a desire to join as well. An interesting applicant
     fail to fructify for one reason or the other and with   is Taiwan—which signed up just before the
     the US and European nations still not reconciled        April 1, 2015 deadline—although issues around
     to concede BRICS nations a greater voice in             its membership name may complicate the deal.
     the governance structure of the Bretton-Woods           Russia also left it to the last minute to fire in its
     institutions.                                           application. Chinese media reported that only 30
              Whether the BRICS-sponsored NDB will           of the 42 member applications have been accepted.
     be a fitting alternative to the Bretton Woods twin      The Chinese foreign ministry has said that the full
     depends on a host of factors. Major ones of these       list of countries approved as founding members
     factors, among others, are its ability—                 would be released by mid-April 2015.
           (i) to put in place a conflict resolution              The AIIB is aimed at providing finance to
               mechanism,                                    infrastructure projects in the Asia region, as a
          (ii) to devise a robust credit appraisal           multilateral instituion. It is planned to operate
               mechanism, and                                broadly in the same manner as existing multilateral
         (iii) to put in place an effective supervisory      development banks (MDBs) such as the World
               regime.                                       Bank and the Asian Development Bank (ADB).