Potential role of the NDB and AIIB in the global financial system

Abstract

This article focuses on the two recently established multilateral development banks (MDBs) dominated by emerging economies: Asian Infrastructure Investment Bank (AIIB) and New Development Bank (NDB). The authors explore the main economic and political incentives that lie behind the creation of these institutions, examine challenges and opportunities they are likely to face, and provide a forecast of their loan portfolios growth in the coming years. The forecast includes two scenarios: basic and optimistic, and is based on the analysis of NDB and AIIB differences from traditional banks, and potential benefits and challenges they can bring. The methodology used for assessment allows projecting the financial capacity of the two banks based on their announced shareholder capital and likely financial performance determined by membership, governance arrangements and other factors, and takes into account recent developments in both banks. Based on the forecast, the authors conclude that in ten years the new banks will be able to provide infrastructure financing at the level of traditional institutions working in the area. In order to develop in accordance with the optimistic scenario, the new banks should adhere to their basic alternative principles, but also rely on the experience of traditional banks in areas where they have proved their effectiveness. These include exchange of experience on selection of projects, social and environmental safeguards, and monitoring results. Apart from addressing the global infrastructure gap, the new banks could also stimulate traditional ones to reform their governance and change operational modalities and thus become more responsive to developing countries’ interests.

Keywords

• многосторонние банки развития
• Новый банк развития (НБР)
• Азиатский банк инфраструктурных инвестиций (АБИИ)
• БРИКС
• глобальная финансовая архитектура
• инвестиции
• инфраструктура