Weekly Geopolitical Report – The AIIB (April 20, 2015)

by Bill O’Grady

China has founded an infrastructure bank, the Asian Infrastructure Investment Bank (AIIB), to compete with the World Bank (WB) and the Asian Development Bank (ADB).  The U.S. has opposed the creation of this bank but, despite administration opposition, 57 nations have joined it, including 14 members of the G-20.  A chorus of commentators has suggested that the founding of this bank may mark the end of U.S. hegemony.

In this report, we will describe the AIIB, including its members and capitalization.  Next, we will cover the conventional wisdom surrounding the bank, and follow up with our analysis of the real impact of the bank.  We will conclude with potential market ramifications of this framework.

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