Luxembourg and London vie to host AIIB's Europe office

Want China Times, Staff Reporter 2015-03-30

An illustration showing nations lining up to jump on the AIIB bus. (Illustration/CFP)

As of March 28, 42 countries — including 10 from Europe — have officially announced their intent to join the China-proposed Asian Infrastructure Investment Bank (AIIB).

Due to the expansion of the AIIB's circle of friends in Europe, a focus now is where the bank's European office will be located, with London and Luxembourg having emerged as the two most obvious competitors, Shanghai's China Business News reports.

Although Luxembourg has not caught as much attention as Britain, its strength should not be overlooked. The Grand Duchy has the world's highest GDP per capita at US$110,700 and like London it is one of the world's biggest financial centers. Furthermore, Luxembourg is the largest fund center in the world after the United States, and is the premier private banking center in the eurozone.

Paul Steinmetz, Luxembourg's ambassador to China, told China Business News that Luxembourg is hoping to host the AIIB's Europe office and looks forward to sharing its professional knowledge with China. Steinmetz noted that Luxembourg is home to the headquarters of the European Investment Bank and is an active member of the Asian Development Bank (ADB). The chief of the ADB's regional liaison office in Bangkok is from Luxembourg, he added.

Luxembourg has also been competing with London to become an offshore center for trade in the renminbi and joining the AIIB is a crucial step in consolidating this aim.

Liu Ying, a research fellow at the Chongyang Institute for Financial Studies at Renmin University of China in Beijing, said the purpose of the United Kingdom joining the AIIB is to secure its status as a global financial center. Liu said Britain has shown great confidence in China and the renminbi, evidenced by the fact that it is the first G7 nation to sign a bilateral currency swap agreement with China and is speeding up its efforts to establish a yuan settlement system and to become an offshore yuan center.