Designed to provide financial support for infrastructure development and regional connectivity in Asia the bank is headquartered in Beijing, China. Its first President, Mr Jin Liqun was elected in January 2016. The purpose of the Bank is twofold: to foster sustainable economic development, create wealth and improve infrastructure connectivity in Asia by investing in infrastructure and other productive sectors; and secondly promote regional cooperation and partnership in addressing development challenges by working in close collaboration with other multilateral and bilateral development institutions.
Under its Articles of Agreement, the AIIB's functions include: (i) promoting public and private investment in the Asia region for development, in particular for infrastructure and other productive sectors; (ii) utilizing the resources at its disposal for financing such development in the region; and (iii) encouraging private investment that contributes to economic development in the Asia region, in particular in infrastructure and other productive sectors, and supplementing private investment when private capital is not available on reasonable terms and conditions.
As of January 2016 the founding members are: Australia, Austria, Azerbaijan, Bangladesh, Brazil, Brunei Darussalam, Cambodia, China, Denmark, Egypt, Finland, France, Georgia, Germany, Iceland, India, Indonesia, Iran, Israel, Italy, Jordan, Kazakhstan, Korea, Kuwait, Kyrgyz Republic, Lao PDR, Luxembourg, Malaysia, Maldives, Malta, Mongolia, Myanmar, Nepal, Netherlands, New Zealand, Norway, Oman, Pakistan, Philippines, Poland, Portugal, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tajikistan, Thailand, Turkey, the United Arab Emirates, the United Kingdom, Uzbekistan, and Vietnam.
Financing & Operations.
The authorized capital stock of the AIIB will be US$100 billion, divided into 1 million shares having a par value of US$100,000 each. The original authorized capital stock will be divided into 20% paid-in shares and 80% callable shares.
The basic parameter for allocation of capital stock to members is the relative share of the global economy of members (based on GDP) within the regional and non-regional groupings, with the understanding that the GDP share is indicative only for non-regional members.
What are AIIB's key financial instruments?
The AIIB will focus principally on financing specific projects or specific investment programs, equity investments; and guarantees. It may: (i) make, co-finance or participate in direct loans; (ii) invest in the equity capital of an institution or enterprise; (iii) guarantee loans for economic development; (iv) deploy Special Funds resources in accordance with the agreements determining their use; or (vi) provide other types of financing as may be determined by the Board of Governors. Special Funds would be donor funds that are given to the Bank for use consistent with its purpose and functions.
Future Capital.
In addition to the capital subscribed by members, the AIIB will raise funds primarily through the issuance of bonds in financial markets as well as through the inter-bank market transactions and other financial instruments. The AIIB may raise funds, through borrowing or other means, in member countries or elsewhere, in accordance with relevant legal provisions.