Summary
Shareholding formulas determine member countries’ voice in capital-based international organizations. They are crucial for international finance and draw much attention in negotiations. In principle, these formulas reflect member countries’ relative economic positions, but in practice, they serve as a starting point in negotiations, alongside other economic and political factors. This chapter investigates the unique shareholding formula of the Asian Infrastructure Investment Bank (AIIB) and compares it with those of the Bretton Woods institutions, that is, the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD), and the International Finance Corporation (IFC). It shows that both the AIIB and the Bretton Woods institutions have learnt from each other’s shareholding formulas. Built upon the Bretton Woods practice, the AIIB’s GDP-based shareholding formula could stimulate the IMF to establish a new quota formula under the 16th general review of quotas, the IBRD to implement the results calculated from its 2016 Dynamic Formula, and the IFC to develop its own formula by the date of the next shareholding review in 2025.
This chapter originally appeared in Journal of International Economic Law (2022)25(4), entitled “Shareholding Formulas in International Financial Institutions: Learning from the Asian Infrastructure Investment Bank”, coauthor Dr. Tong Liu.
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Notes
- 1.
Member countries’ financial contributions to IFIs include monetary forms other than capital shares. For example, while IMF quotas (i.e., capital shares, special drawing right (SDR) 477 billion in total) are the main source of IMF financing, its borrowing arrangements (i.e., SDR 361 billion for multilateral borrowing and SDR 135 billion for bilateral borrowing) temporarily supplement quota resources. AIIB members may similarly contribute to a special or trust fund of the institution, besides their capital–share contribution.
- 2.
There are at least three versions in the Articles of Agreement (AOA, or the Charter) of the IFIs regarding a member’s right (or obligation) to subscribe to a particular number of shares. Version 1: In some IFIs, capital shares are designated to a particular member as a ceiling, of which the member may subscribe at the maximum, but with no floor requirement. The arrangement is exemplified in the AIIB AOA Article 5.1: ‘Each member shall subscribe to shares of the capital stock of the Bank…. The initial number of shares available to be subscribed by countries which become members in accordance with Article 58 shall be that set forth in Schedule A’ (emphasis added). Echoed in practice, for example, Brazil, as an AIIB founding member, has subscribed 50 shares only out of the 31,810 capital shares designated to it in Schedule A. See further below in Section II. Version 2: Some institutions indeed have a floor or minimum requirement of capital subscription for each member. For example, International Bank for Reconstruction and Development (IBRD) AOA Article 2.3(a) stipulates that ‘The minimum number of shares to be subscribed by the original members shall be those set forth in Schedule A’ (emphasis added). In Article 5.1 of AOA of the European Bank for Reconstruction and Development (EBRD), in addition to the provisions of the same effect as in the AIIB, it stipulates that ‘No member shall have an initial subscription of less than one hundred (100) shares’. Version 3: In other institutions, the number of shares to be subscribed by a member, as specified in a schedule, is an exact requirement. For example, African Development Bank AOA Article 6.1 stipulates: ‘The initial number of shares to be subscribed by a State which acquires membership in accordance with paragraph 1 of article 64 of this Agreement shall be that set forth in this respect in annex A to this Agreement, which shall form an integral part thereof’ (emphasis added). Asian Development Bank (ADB) follows suit.
- 3.
In this Chapter, the World Bank refers to both the IBRD and the IDA. This Chapter does not discuss the IDA’s voting rights framework, where each member receives the votes to be allocated under IDA replenishments, which consist of subscription votes and membership votes. For example, IDA20, the latest replenishment, agrees upon ‘A flat uniform vote price of $17,670 for all Non-Recipients, where Non-Recipients will receive additional subscription votes based on their replenishment contributions’, while the combined voting power of Recipients will be boosted to 20.50% in recognition of the importance of poor countries’ voice. IDA, ‘IDA20 Final Replenishment Report: Building Back Better from the Crisis: Toward a Green, Resilient and Inclusive Future’ (February 17, 2022) at 199 (Annex 17 ‘IDA Voting Rights Framework’, paras 26–28).
- 4.
The membership of some IFIs (such as the AIIB, the ADB, etc.) is also open to non-sovereign entities.
- 5.
Basic votes in the IBRD (plus IFC), IMF, AIIB, and ADB are currently set at 5.55%, 5.502%, 12%, and 20% of total votes respectively. It should be noted that the EBRD is a major exception with no basic votes. EBRD AOA, Article 29.1.
- 6.
For an account of the political nature dominated by the US in the IMF’s quota distribution in 1944 and subsequent quota shifts, see Ayse Kaya, Power and Global Economic Institutions (Cambridge: Cambridge University Press, 2015), at 51–80.
- 7.
In terms of corporate governance, the AIIB resembles the World Bank and the IMF in establishing a three-layered governance structure, i.e., the Board of Governors, the Board of Directors, and management led by the President. The AIIB also sets up high environment, social and procurement requirements, comparable to those of the Bretton Woods institutions.
- 8.
European Parliamentary Research Service, ‘Asian Infrastructure Investment Bank: How Lean, Clean and Green is the AIIB?’ February 2021, at 3.
- 9.
A discussion of Asian values as embedded in the AIIB is available at David M. Ong, ‘The Asian Infrastructure Investment Bank: Bringing “Asian Values” to Global Economic Governance?’, 20 (3) Journal of International Economic Law (2017), 535–60.
- 10.
In terms of global membership, the AIIB has 105 members across six continents except Antarctica. In terms of global investment, the AIIB has invested across Asia, Oceania, Europe, Africa, and Latin America. In terms of global procurement, the AIIB AOA explicitly authorizes the institution to do so. And in terms of global recruitment, AIIB staffs are from both members and non-member countries, including the US and Japan.
- 11.
See a succinct description of the AIIB’s general feature—‘heritage and innovation’, Natalie Lichtenstein, A Comparative Guide to the Asian Infrastructure Investment Bank (Oxford: Oxford University Press, 2018), at 36–38.
- 12.
Andrés Rigo Sureda, ‘The Law Applicable to the Activities of International Development Banks’, in Collected Courses of The Hague Academy of International Law (Volume 308) (Brill Nijhoff, 2004), at 43.
- 13.
The split between regional and nonregional shares in the ADB is 60:40, as opposed to 75:25 in the AIIB, which is elaborated in Section II. Kai Yin Allison Haga, ‘The Asian Infrastructure Investment Bank: A Qualified Success for Beijing’s Economic Statecraft’, 50 (3) Journal of Current Chinese Affairs (2021), at 399.
- 14.
The Chief Negotiators’ Report identifies itself as ‘part of the AIIB’s basic documents, for future reference in interpreting the AIIB Articles’.
- 15.
Chinese Ministry of Finance, ‘Press Release about the AIIB AOA’ (Vice Minister Shi Yaobin answered reporters’ questions on issues related to the AIIB Agreement), 29 June 2015 http://www.mof.gov.cn/zhengwuxinxi/caizhengxinwen/201506/t20150629_1262934.htm (visited 12 September 2021).
- 16.
Chief Negotiators’ Report on the AIIB AOA, Article 5.3.
- 17.
Russia is not a country of Asia and Oceania based on the United Nations (UN) classification, which the AIIB officially adheres to in defining its regional membership. But the country is somehow classified as regional in Article 3.1 (a) of AIIB AOA and Schedule A thereof, thus being able to rank the third largest shareholder, and winning a vice presidency of Russian nationality in the AIIB.
- 18.
A small number of shares are left unallocated in both regional and nonregional groups after the initial capital allocation, as indicated in Schedule A of AIIB AOA. Those unallocated shares (16,150 shares for regional and 2336 shares for nonregional) are prepared for new members to join the Bank after its establishment, pursuant to the Chief Negotiators’ Report.
- 19.
The membership of Kuwait and South Africa, two prospective founding members, has been delayed for years since December 31, 2016—the original deadline of deposit of ratification instruments. The shares originally allocated to the two countries in AIIB AOA Schedule A could be subscribed by new members.
- 20.
See AIIB AOA, Schedule A.
- 21.
Ibid, Articles 58.1 stipulates: ‘Instruments of ratification, acceptance or approval shall be deposited with the Depository not later than December 31, 2016, or if necessary, until such later date as may be decided by the Board of Governors by a Special Majority vote as provided in Article 28’.
- 22.
It is interesting to note that Korea is another founding member that did not subscribe fully; it subscribed 37,387 shares out of 37,388 allocated shares, i.e., only one share less than originally allocated in AIIB Schedule A. However, most AIIB founding members subscribed fully to the capital stock as allocated to them. AIIB, ‘Members and Prospective Members of the Bank’, 24 August 2021 https://www.aiib.org/en/about-aiib/governance/members-of-bank/index.html (visited 13 September 2021).
- 23.
A PFM becomes a member of the Bank only after ‘its instrument of ratification, acceptance or approval is deposited’. AIIB AOA Article 58.1.
- 24.
The percentage of basic votes (12%) is stipulated in Ibid, Article 28.1.
- 25.
The percentage of PFM votes (3%) is concluded upon the condition that all PFMs fully subscribed their shares as allocated in AIIB Schedule A, which turned out to be not so. Lichtenstein, above n 11, at 152.
- 26.
AIIB AOA Article 5.4.
- 27.
Ibid, Article 5.4.
- 28.
Ibid stipulates ‘No member shall be obligated to subscribe to any part of an increase of capital stock’.
- 29.
The practice of SCI is not rare in the Bretton Woods institutions, such as the 2018 SCI in the World Bank.
- 30.
As the Development Committee states, ‘…members’ subscriptions should reflect their relative position in the world economy, subject to the right of each member to maintain its existing pro rata share in the capital on the occasion of any increase in the authorized capital (pre-emptive right)’. Development Committee (Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund), ‘Enhancing voice and participation of developing and transition countries in decision-making at the World Bank and IMF’ (DC 2003–0002, 27 March 2003), at 11–12.
- 31.
Jonathan Wheatley, ‘Multilateral development banks’ balance sheets strained by global crises’, Financial Times, 2 May 2022.
- 32.
See AIIB, above n 22.
- 33.
A super majority vote in the AIIB Board of Governors is defined as ‘an affirmative vote of two-thirds of the total number of Governors, representing not less than three-fourths of the total voting power of the members.’ AIIB AOA Article 28. Super majority decisions include capital increases, modifying the regional shareholding percentage, assistance to non-members, increase in the lending limit, allocation of net income to other purposes, changes in the Board of Directors or its non-resident basis, election of the President and amendment of the AIIB Charter. Lichtenstein, above n 11, at 30.
- 34.
‘Chinese Deputy Minister of Finance says China has no intention to seek or drop a veto in the AIIB’ (China's Vice Minister of Finance": The proposition that China seeks or gives up its one-vote veto power on the AIIB is untenable), 25 March 2015.
http://www.xinhuanet.com/politics/2015-03/25/c_1114763452.htm (visited 27 June 2022).
- 35.
‘Chinese Financial Minister says China does not seek a 50% capital subscription in the AIIB’ （Lou Jiwei: The establishment of the AIIB is a win-win move, and China’s investment does not necessarily have to reach 50%）, 3 July 2014 http://www.gov.cn/xinwen/2014-07/03/content_2711747.htm (visited 27 June 2022).
- 36.
Ibid.
- 37.
Ibid.
- 38.
AIIB AOA Article 4.3.
- 39.
Harry Dexter White, one of the main architects of the Bretton Woods institutions, referred to the linkage between voting and financial contributions explicitly, ‘If each member of the board were to be given an equal vote, then a small country that invested one million dollars would have as much power in making decisions as a country that has subscribed a hundred or a thousand times that amount’. Both advanced and non-advanced economies concurred with White in the Bretton Woods Conference. See Kaya, above n 6, at 55.
- 40.
UN Charter Article 23.1 lists China, France, Russia, the United Kingdom and the US as permanent members of the Security Council, and Article 27.3 stipulates their veto power on non-procedural issues.
- 41.
Bin Gu, ‘China, the US and what it means to be a hegemon’, The Straits Times, 16 July 2022.
- 42.
For greater certainty, quota increase and distribution is distinct from SDR allocation, which can be done simply with a stroke of the pen. The IMF finished its largest ever SDR allocation in 2021, equivalent to 650 billion US dollars, in a bid to boost global liquidity among member states, in particular to cope with the impact of the COVID-19 crisis for most vulnerable countries. IMF members’ existing quotas play a decisive role in SDR allocation, as they do in quota distribution. IMF, ‘2021 General SDR Allocation’ https://www.imf.org/en/Topics/special-drawing-right/2021-SDR-Allocation (visited 3 June 2022).
- 43.
IMF, ‘Quota Formula Review—Initial Considerations’, 10 February 2012, at 6.
- 44.
Andreas F. Lowenfeld, International Economic Law, 2nd ed. (New York: Oxford University Press, 2008), at 610, quoting Horsefield.
- 45.
See IMF, n 43, at 6.
- 46.
Ibid, at 6.
- 47.
A group of external experts—the Quota Formula Review Group, after reviewing the five quota formulas, submitted a report to the IMF Executive Board in 2000, recommending the adoption of a single formula with two variables—market GDP and variability. IMF, ‘External Review of the Quota Formulas’ (EBAP/00/52, 5/1/00), 1 May 2000 https://www.imf.org/external/np/tre/quota/2000/eng/qfrg/annex/dload/EBAP52_Sup1.pdf (visited 24 August 2021).
- 48.
See IMF, above n 43, at 4.
- 49.
‘The Board of Governors shall at intervals of not more than five years conduct a general review, and if it deems it appropriate propose an adjustment, of the quotas of the members’. IMF AOA, Art. III Sect. 2(a).
- 50.
IMF, ‘Press Release: Historic Quota and Governance Reforms Became Effective’, 27 January 2016, https://www.imf.org/en/News/Articles/2015/09/14/01/49/pr1625a (visited 25 August 2021).
- 51.
The reform, initially set to take effect by October 2012, took effect in 2016. ‘Press Release: IMF Managing Director Christine Lagarde Welcomes U.S. Congressional Approval of the 2010 Quota and Governance Reforms’, 18 December 2015, https://www.imf.org/en/News/Articles/2015/09/14/01/49/pr15573 (visited 30 March 2022).
- 52.
Robert H. Wade and Jakob Vestergaard, ‘Why is the IMF at an Impasse, and What Can Be Done about it?’, 6 (3) Global Policy (2015), at 294.
- 53.
Similarly, the US opposed the European Commission’s proposal in 2015 for a single representation of the euro area in the IMF, which could form a constituency with more than 20% of the total votes and threaten the US’s veto. Emanuel Castellarin, ‘ « La réforme institutionnelle du FMI: du 4ème au 7ème amendement. Conséquence du changement des rapports de forces dans le monde ou de l’enseignement des crises ?»,’ in Michael Waibel (ed), Les implications juridiques des crises financières mondiales (Leyde, Brill/Nijhoff, 2020), at 153.
- 54.
Ernando S. De Leon, ‘the IMF Quota Formula Review’, Bangko Sentral Review (the Philippines) 2011, at 43–47, referring to the IMF staff paper ‘Quota Formula Review—Initial Considerations’ and other sources.
- 55.
IMF, ‘Report of the Executive Board to the Board of Governors on the Outcome of the Quota Formula Review’, 30 January 2013, at 2–3, http://www.imf.org/external/np/pp/eng/2013/013013.pdf (visited 15 August 2022). The G24 Secretariat, Ted Truman (arguing for the Cooper formula) and many other external reports argue for the substitution of PPP GDP for market-based GDP. The rationale is that PPP GDP more correctly measures the level of economic activity in emerging markets and developing countries where market prices of nontradeables tend to be significantly below those prices in advanced economies. See IMF, n 43, at 8.
- 56.
Openness is officially defined by the IMF as the annual average of the sum of current payments and current receipts (goods, services, income, and transfers) for a five-year period.
- 57.
See IMF, above n 55, at 3.
- 58.
See Leon, above n 54, at 45. Notwithstanding those defects, the compression factor (alongside PPP GDP) is agreed to be retained in the formula for 20 years, then to be revisited. See IMF, n 43, at 12.
- 59.
IMF, ‘IMF Quota and Governance Reform—Elements of an Agreement’, 31 October 2010, at 1.
- 60.
IMF, ‘Fifteenth and Sixteenth General Reviews of Quotas—Report of the Executive Board to the Board of Governors’ (attaching a Draft Board of Governors Resolution concluding the fifteenth general review of quotas with no increase in quota), 13 January 2020 https://www.imf.org/en/Publications/Policy-Papers/Issues/2020/02/13/Fifteenth-and-Sixteenth-General-Reviews-of-Quotas-Report-of-the-Executive-Board-to-the-Board-49049?sc_mode=1 (visited 15 August 2022).
- 61.
The Riyadh G20 leaders’ communique stated, ‘We remain committed to revisiting the adequacy of quotas and will continue the process of IMF governance reform under the 16th general review of quotas, including a new quota formula as a guide, by 15 December 2023.’ G20 Leaders Declaration, Riyadh, 21–22 November 2020, para 14.
- 62.
IMF Board of Governors Resolution on 7 February 2020, https://www.imf.org/en/About/Factsheets/Sheets/2016/07/14/12/21/IMF-Quotas (visited 19 June 2022).
- 63.
This disappointing quote is from Jakob Vestergaard and Robert H. Wade, ‘Still in the Woods: Gridlock in the IMF and the World Bank Puts Multilateralism at Risk’, 6 (1) Global Policy (2015), at 4. Kaya’s comment sheds light on the reason for the IMF stalemate, ‘[w]hile the formulae embody economic logic, such technical logic cannot be understood in a sterile manner that excludes politics.’ See Kaya, above n 6, at 80.
- 64.
G20 Leaders Declaration, Los Cabos, 18–19 June 2012, para 33.
- 65.
The percentage of basic votes out of the total votes in the IMF is less than half of their level at 11.3% in 1944, evidencing deepened inequality among members. See Castellarin, above 53, at 143.
- 66.
As evidenced, Article V of the IBRD Charter is nearly an exact copy of Article XII of the IMF Charter, both articles being entitled as ‘Organization and Management’.
- 67.
World Bank, ‘Repowering the World Bank for the 21st Century’ (Report of the High-Level Commission on Modernization of World Bank Group Governance, known as the Zedillo Commission Report, 2009), at 25.
- 68.
Voice Reform Phase 1, as agreed in 2008, increased the voting power of developing and transition countries (DTC) in the IBRD from 42.6 to 44.1% by increasing basic votes to 5.55% of total votes. Voice Reform Phase 2, as agreed in 2010, increased DTC voice further to over 47.19% by using a new shareholding formula, the basis for the later 2016 Dynamic Formula. Development Committee, ‘World Bank Group Voice Reform: Enhancing Voice and Participation of Developing and Transition Countries in 2010 and Beyond’ (DC2010-0006/1, 25 April 2010), at 2, 15–16.
- 69.
Ibid, at 16.
- 70.
Ibid, at 1, quoting ‘Monterrey Consensus on Financing for Development’, International Conference on Financing for Development, Monterrey, Mexico, 18–22 March 2002 (para 63).
- 71.
Development Committee, ‘Dynamic Formula—Report to the Governors Annual Meetings 2016’ (DC2016-0010, 20 September 2016), at 1.
- 72.
Ibid, at 2.
- 73.
Ibid, at 2.
- 74.
Ibid, at 4.
- 75.
Ibid, at 3.
- 76.
Development Committee, ‘2020 Shareholding Review: Concluding Report to Governors at the Annual Meetings’ (DC2021-0008, 28 September 2021), para 10.
- 77.
Ibid, paras 4 and 13. The World Bank’s 2018 Capital Package, comprising the 2018 SCI and other reforms，made a US$13 billion increase in paid-in capital to IBRD and IFC, and increased China’s voting power from 4.45% to 5.71%, among other achievements. Congressional Research Service, ‘2018 World Bank Capital Increased Proposal’, 14 December 2018.
- 78.
Development Committee, ‘World Bank/IMF Spring Meetings 2018: Development Committee Communiqué,’ 21 April 2018, para 7 https://www.devcommittee.org/sites/dc/files/download/Communiques/2018-06/Communique%28E%29immediaterelease4-21.pdf (visited 16 February 2022).
- 79.
Kaya’s comment on IMF quota shifts sheds light on the reason for the IBRD stalemate, ‘the largest shareholders tend to prefer modest increases, compared to … some developing countries, which see the quota increase as the basis for … greater voice within the institution’. See Kaya, above n 6, at 66.
- 80.
Curiously, if calculated according to the Dynamic Formula, the US shareholding would increase by 1.48%, rather than decrease. See Development Committee, above n 76, at 13.
- 81.
Bin Gu, ‘Chinese Multilateralism in the AIIB’, 20 (1) Journal of International Economic Law (2017), at 143.
- 82.
Such warning is neither rare nor new. Jakob Vestergaard and Robert H. Wade used to warn acutely against ‘further marginalization’ of Bretton Woods institutions if the US kept delaying the shareholding reforms in those institutions. See Vestergaard and Wade, above n 63, at 10.
- 83.
Development Committee, ‘2020 Shareholding Review: Report to Governors at the Annual Meetings’ (DC2020-0009, 16 October 2020), paras 18–21.
- 84.
See Development Committee, above n 76, para 15.
- 85.
The opponents argue that ‘separate formulas in IBRD and IFC would imply divergence rather than convergence of the shareholding structures of the two institutions, which is not consistent with a one WBG approach, nor with approaches taken in the past’. See Development Committee, above 83, para 21.
- 86.
Ibid, para 21.
- 87.
Vestergaard describes the shareholding negotiations in the World Bank as ‘it took month after month of “24/7” negotiations, and blistered nerves all round, to even get changes of this [microscopic] magnitude, as Executive Directors and World Bank staff searched for compromises “at the third decimal point”’. See Vestergaard and Wade, above n 63, at 6.
- 88.
The AIIB has a lofty financing target of 50% for private sector projects by 2030. AIIB, ‘Corporate Strategy: Financing Infrastructure for Tomorrow’ (September 2020), at 27.
- 89.
See Development Committee, above n 76, para 20(iv).
- 90.
The Lima Shareholding Principles are (1) regular shareholding reviews every five years based on a dynamic formula, (2) to achieve an equitable balance of voting power, (3) that all voices are important, (4) small and poor countries’ voting power not to be diluted, and (5) that shareholding brings both rights and responsibilities. See Development Committee, above n 76, paras 3 and 5.
- 91.
This level of 5.55% is stipulated in the IFC AOA, Article IV Sect. 3(a)(i). By comparison, the number of basic votes was set at 250 votes per member in the Bretton Woods institutions in 1944, amounting to an original level of over 10% of the total voting stock. Over time, however, the share of basic votes was eroded with the increase of capital subscription and share-votes allocation. Jakob Vestergaard and Robert H. Wade, ‘Protecting Power: How Western States Retain the Dominant Voice in the World Bank’s Governance’, 46 World Development (2013), at 154.
- 92.
The elaboration of the AIIB’s role in correcting the ‘unsustainable elements the existing world order’ is available at Bin Gu, The Law and Governance of the Asian Infrastructure Investment Bank (The Netherlands: Wolters Kluwer, 2019), at 8–10.
- 93.
Vestergaard and Wade find that the US administration, which had agreed earlier on the IMF reform, conspired in a de facto manner with the US Congress in the delay of ratifying it. See Wade and Vestergaard, above n 52, at 292.
- 94.
IMF, ‘IMF Governors Approve a Historic US$650 Billion SDR Allocation of Special Drawing Rights’, 2 August 2021 https://www.imf.org/en/News/Articles/2021/07/30/pr21235-imf-governors-approve-a-historic-us-650-billion-sdr-allocation-of-special-drawing-rights (visited 27 February 2022).
- 95.
Only prescribed SDR holders may be eligible to receive SDRs as channeled to them. So far there are eight development institutions in the official list of prescribed SDR holders in the IMF, including the World Bank, the African Development Bank, and the Asian Development Bank. The AIIB is not currently among them. So, the AIIB needs to obtain the position of a subscribed holder to join the program. IMF, ‘Guidance Note for Fund Staff on the Treatment and Use of SDR Allocations’ (August 2021), at 38.
- 96.
The Board of Governors carried out the first AIIB capital review in 2020, which resolved that the capital stock would remain unchanged subject to the next review, currently scheduled for 2025. AIIB Annual Report of 2020, at 18.
- 97.
Lichtenstein, the AIIB’s inaugural General Counsel who was engaged in drafting the AOA, recalled that the AIIB Chief Negotiators were ‘[p]erhaps mindful of these [more than a decade of] World Bank Group discussions [leading up to the 2016 Dynamic Formula]’, when recording their own standard of capital allocation. Lichtenstein, above n 11, at 114–15.
- 98.
A group of emerging economies have long advocated increasing the weight of GDP in the shareholding formulas in the Bretton Woods institution.
- 99.
The AIIB Chief Negotiators’ Report on the Charter, where the GDP-based capital allocation formula appears, was adopted on May 22, 2015, prior to the World Bank’s 2016 Dynamic Formula.
- 100.
See Development Committee, above 83, at 11.
- 101.
The quote is borrowed from Lowenfeld, above n 44, at 610.
- 102.
Development Committee, ‘Enhancing voice and participation of developing and transition countries in decision-making at the World Bank and IMF’ (DC 2003–0002, 27 March 2003) at 11–12.
- 103.
See IMF, above n 55, at 2–3.
- 104.
The statistics is based on a scenario of 2014, whereby the 2010 Quota and Governance go into effect. Today with the rapid increase of China’s GDP, the disparity can only be more than five times. See Vestergaard and Wade, above n 63, at 4.
- 105.
For example, African Development Bank (AfDB) stipulates 625 basic votes for each member, and Inter-American Development Bank (IDB) stipulates 135 basic votes for each member. As share votes increase with capital increases, however, basic votes now represent a smaller percentage of total votes (less than one percent, as opposed to 50% for AfDB and 5% for IDB at the time of establishment respectively). Lichtenstein, above n 11, at 152.
- 106.
Haga observes other impacts made by the AIIB on the reform of peer institutions, which are not discussed in this Chapter. They include the World Bank’s and the ADB’s reform on lending policy (including their pivot to infrastructure projects), and the IMF approval of the inclusion of Chinese Renminbi in the SDR basket in 2015. See Haga, above n 13, at 414.
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Gu, B. (2024). Members’ Shareholding: A GDP-Based Formula. In: Chinese Multilateralism in the Asian Infrastructure Investment Bank (AIIB). Modern China and International Economic Law. Springer, Singapore. https://doi.org/10.1007/978-981-97-1219-9_1
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