aiibThe China-led Asian Infrastructure Investment Bank (AIIB), was formally established on Friday in Beijing. China’s Finance Ministry has said the new lender is expected to start operations early next year.

“The AIIB is legally established as the Articles of Agreement take effect today,” said Lou Jiwei, China’s Minister of Finance.

Founding members include the BRICS, half of the European Union and all of the Asian bloc, ASEAN.

The 60-article agreement outlines the financial shares of each founding member as well as rules for policymaking, governance structure, and business and operational systems.

The agreement became effective once the parliaments of 17 members, who hold a combined 50.1 per cent stake in the bank, ratified the agreement.

“The establishment of the AIIB marks a milestone in the reform of global economic governance system,” China’s Finance Minister Lou said on Friday.

The AIIB will be operational after board of directors and executive council meet for the first time from Jan. 16 to 18 in Beijing, according to Lou.

The bank’s president will be officially appointed and the management team will be instituted during the meetings.

BRICS members, China, India and Russia are the three largest shareholders, taking a 30.34 per cent, 8.52 per cent, 6.66 per cent stake, respectively. Their voting shares are calculated at 26.06 per cent, 7.5 per cent and 5.92 per cent.

“China is not deliberately seeking a veto power,” its stake and voting share in the initial stage are the “natural outcome” of current rules, and may be diluted as more members join, China’s Vice Finance Minister Shi Yaobin has said.

The bank will always be open to new membership, Jin Liqun, the bank’s president-designate has confirmed.

The bank, headquartered in Beijing, now has 57 members, that includes Germany, France, Italy, and the UK. It is expected to name its first lending projects in mid-2016.

The China-backed multilateral development institution is tasked with financing infrastructure development across Asia.

With an authorized capital of $100 billion, the AIIB will finance infrastructure projects like the construction of roads, railways, and airports in the Asia-Pacific Region.

The ADB has estimated that in the next decade Asian countries will need $8 trillion in infrastructure investments to maintain the current economic growth rate.

The AIIB will extend China’s financial reach and compete not only with the World Bank, but also with the Asian Development Bank, which is heavily dominated by Japan.

China scholar Asit Biswas at the Lee Kuan Yew School of Public Policy, Singapore, says Washington’s criticism of the China-led Bank is “childish”.

“Some critics argue that the AIIB will reduce the environmental, social and procurement standards in a race to the bottom. This is a childish criticism, especially because China has invited other governments to help with funding and governance,” he writes.

The US and Japan have not applied for the membership in the AIIB.

However, despite US pressures on its allies not to join the bank, Britain, France, Germany, Italy among others have signed on as founding members of the China-led Bank.

Meanwhile, New Zealand and Australia have already announced that they will invest $87.27 million and $718 million respectively as paid-in capital to the AIIB.