SYDNEY - Australia yesterday said it will join the new Beijing- led Asian Infrastructure Investment Bank (AIIB) as a founding member, contributing A$930 million (S$966 million) in paid-in capital over five years.
Canberra is the latest Washington ally to sign up to the bank, which has been shunned by the US and Japan, the world's largest and third-largest economies respectively.
The AIIB has 57 prospective members, and will have a paid-in capital of US$20 billion (S$27 billion) and total authorised capital of US$100 billion.
Australia's Foreign Minister Julie Bishop and Treasurer Joe Hockey said in a statement: "The decision comes after extensive discussions between the government, China and other key partners around the world.
"There is an estimated infrastructure financing gap of US$8 trillion in (Asia) over the current decade. The AIIB will be part of the solution to closing this gap."
Mr Hockey will seal the agreement in Beijing next Monday.
The Beijing-based bank, expected to be operational later this year, has been viewed by some as a rival to the World Bank and the Asian Development Bank, two institutions under the strong influence of the United States.
The AIIB's success has caught the US off guard. It led a high-profile attempt to dissuade allies from taking part and now finds itself increasingly isolated.
There have been concerns over transparency of the lender, which will fund infrastructure projects in Asia, as well as worries that Beijing will use it to push its own geopolitical and economic interests as a rising power.
But Mr Hockey said that following "intense negotiations" with China and other prospective founding members, Australia was satisfied with how the bank would be governed.
The Australian government expects the bank, through its support of Asian infrastructure projects, to help boost the nation's exports - including minerals, agriculture and services - to the region.
Australia and China signed a landmark trade deal last Wednesday after a decade of talks that Prime Minister Tony Abbott said would give the two nations unprecedented access to each other's markets.