Switzerland has become one of the first Western European countries to back the creation of the Asian Infrastructure Investment Bank (AIIB), a new institution promoting sustainable economic development in Asia.
Britain, France, Italy and Germany have also decided to take this step. The bank’s foundation was first proposed by China, and there are currently 27 signatory countries, particularly from the region.
A statement from the cabinet on Friday external linksaid the move meant Switzerland would “enable Switzerland to be well positioned in the new institution from the outset” and strengthen relations with China and with Asia in general.
The bank’s focus will be on providing financing for energy, transport and telecommunications infrastructure, urban and rural development and the environment. It will have an authorised capital of $100 billion (CHF 98 billion) and provide support by granting loans, investing in equity or providing guarantees.
“The bank has the potential to become an important new part of the international financial architecture and play a major role in the financing of urgently needed infrastructure in Asia,” said the Swiss statement.
The AIIB’s articles of agreement should be adopted this year. Once they have been approved, Switzerland will decide on definite membership of the bank. Before then, the country will have to decide on how much it will contribute financially. A parliamentary decision is also required for joining an international organisation.
The idea of the bank has not been without controversy. The United States, worried about China's growing diplomatic clout, has questioned whether the AIIB would have sufficient standards of governance and environmental and social safeguards.
Japan, Australia and the South Korea, all major US allies, have until now been notable regional absentees from the AIIB. But there are signs opposition is crumbling. Australia said on Friday there was a lot of merit in the AIIB, while Japan's finance minister signalled cautious approval of the institution.
China has said that the bank would be set up by the end of the year and would complement rather than compete with other institutions, including the World Bank and the Asian Development Bank (ADB), the Manila-based multilateral institution dominated by Japan and the US.
“Switzerland believes that it can play a significant role in ensuring that the new bank complies with the international standards in terms of its operating activities and development cooperation. The country's many years of experience and its credibility in multilateral development banks will benefit it in this regard,” said the Swiss statement.