Mar 232015
Global institutions, including the International Monetary Fund (IMF) and the World Bank, have endorsed a China-led international bank, despite opposition from the U.S. “We are comfortable with the idea of a bank that puts together finance for infrastructure, because our view is that there is a huge need for infrastructure in emerging markets countries,” David Lipton, the first deputy managing director of the IMF, told CNBC early on Monday.The $50-billion Asian Infrastructure Investment Bank (AIIB) is being established to meet the need for greater infrastructure investment in lower- and middle-income Asian countries. It comes amid complaints by China and other major emerging economies that they lack influence in institutions such as the IMF, the Asian Development Bank and the World Bank.Support for the AIIB has gathered speed in Europe this month, with the U.K. the first country to sign up, followed by Germany, France and Italy and then Luxembourg and Switzerland.However, Washington has expressed misgivings, officially because of concerns about standards of governance and environmental and societal safeguards. Unofficially, the country’s is thought to be worried about sacrificing its clout in Asia to China, as well as piqued by criticism of slow reforms in the IMF and World Bank.China ‘leader of the world’“China is now the leader of the world,” Sri Mulyani Indrawati, managing director of the World Bank, told CNBC on Sunday in Beijing.“They (Chinese leaders) try to show that they have sound principles in not only presenting a development solution, but also in establishing this new institution and that is why many of the countries now are becoming members of this institution.”Jim McCaughan, CEO of Principal Global Investors, said that China’s move was part of a bid to establish theyuan as a global currency—and that the U.S. might be more positive towards the AIIB then its official statements suggested.“I think Washington will collaborate; I do not think it will officially join, but I think they will collaborate, at least behind the scenes,” McCaughan told CNBC early on Monday, adding that the bank was part of a “bigger picture.”“Ultimately, Chinese economic policymakers, I believe, are pushing towards the idea of the renminbi as a reserve currency… this is one small step in that direction, having a multilateral institution that they can lead,” McCaughan said. Share this:FacebookLinkedInTwitterGoogleTumblrPinterestReddit (more…)
Mar 202015
 WASHINGTON (Reuters) – U.S. Treasury Secretary Jack Lew on Wednesday said failure by Congress to authorize reforms at the International Monetary Fund it was “dangerous” and would limit U.S. leverage on issues such as the China-led infrastructure bank. But a senior Republican lawmaker expressed doubt Congress would take up the reforms this year, increasing the likelihood the IMF would seek to move ahead without the United States. The fund’s member countries agreed in 2010 to reform the institution to give more say to emerging countries, but the Obama administration has so far been unable to persuade Congress to pass necessary funding changes. U.S. foot-dragging is prompting other countries to question Washington’s commitment to international institutions and putting it on the defensive, Lew said at a hearing before a U.S. House of Representatives subcommittee. “I think that’s a very dangerous thing strategically; I think that’s a mistake,” Lew said, adding that passing the IMF reforms would give the United States more leverage in pushing its perspective on the Asian Infrastructure Investment Bank. Germany, France and Italy followed Britain in saying they would join the China-led initiative, despite Washington’s objections to the bank’s environmental and human rights standards. Kay Granger, chairwoman of the House State and Foreign Operations Appropriations Subcommittee, where Lew testified, said she did not believe Congress would pass the IMF reforms when the Congressional Budget Office estimated they would cost $300 million. “In the past, there has not been sufficient congressional support for the IMF proposal, and frankly, I do not expect much to change this year,” she said. In comments to Reuters, Granger also said the Obama administration has been slow in responding to her concerns. The administration has been pushing Congress for two years to approve a shift of some $63 billion from an IMF crisis fund to its general accounts, which is necessary to make good on Washington’s international promise. Granger said the proposal may now be considered as part of the budget discussions for the next fiscal year, which begins in October. The White House says the changes would cost very little, but some lawmakers do not agree and also fret about the risks attached to IMF loans. U.S. delays on the reforms have prompted the IMF’s board to consider other options, including a proposal under which Washington would lose its veto power at the global lender. (Reporting by Anna Yukhananov; Editing by Steve Orlofsky)–business.html   Share (more…)