Asian Bank takes Center Stage
18 months ago when China first announced its plans to take a lead role in establishing a new development bank, many knew it would be a significant development for the world economy. But not many predicted that it would achieve success so quickly in signing up members.
According to an article in ZeroHedge, after the deadline, China announced that it has 46 founding members for its new Asian Infrastructure Investment Bank. (Source: ZeroHedge 2015 April 7th) In addition to attracting many countries within the region, the surprise has come with how many advanced economies have signed up.
The article cites that 14 advanced economies from the group of 20 are said to be participating. The success has even been a shock to China. “Such wide and warm support was unexpected,” said Jin Canrong, professor of international relations at Renmin University in Beijing. (Source: ZeroHedge)
China is also Developing New Alliances
According to an article in Sputnik News, Chinese and Russian leaders have reached 107 bilateral agreements in the past two years. Fifty-five of them have been implemented, 21 are long term projects while 31 are being actively implemented. (Source:sputniknews.com 2015 April 7th)
While Russia is only China’s 9th largest trading partner, the agreements demonstrate how new alliances in Asia are going to have a big impact on the global economy in the years to come. New trade agreements, currency agreements and financing for projects are no longer going to be influenced by western organizations or systems.
The Gold Market will Catch up
The impact of the new initiatives by Asia can’t be overstated. Even former US Treasury Secretary Larry Summers said “This past month may be remembered as the moment the United States lost its role as the underwriter of the global economic system”. (Source: Bloomberg 2015 April 6th)
The comments are true not just for the US but also for other major Western financial centers such as London and Frankfurt.
It is disappointing that Gold has been struggling to hold the $1,200 price level this week. Given the many geo-political conflicts along with the continued zero interest rate policies of the Central Banks one would expect the physical Gold and Silver markets to be trading higher.
However, the formation of the new Asian financial initiatives are the first real major developments that point to shift in power and influence in the global economy. Gold and Silver prices will eventually catch up to these new developments. It’s only a matter of time.
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