Well, that escalated quickly.

Just a week ago it appeared Washington had managed (for the time being at least) to convince the US’ closest allies to refrain from joining the Asian Infrastructure Investment Bank, a sinocentric institution aimed at promoting development across Asia that is meant to rival the US/Japanese-led ADB and begin a seismic shift away from the world’s traditionally US-dominated institutions such as the World Bank and the IMF. Then, much to the chagrin of Washington, the UK joined as a founding member calling it an “unrivaled opportunity.”

As we and many other observers correctly noted at the time, the move by Britain could well embolden other countries who had expressed an interest initially but been deterred by pressure from Washington to reconsider their bids for membership. In (very) short order, everyone from Germany to Australia to Luxembourg was suddenly ready to cast their lot with the Chinese despite US warnings that the bank won’t adopt the proper operational standards. As we said yesterday, the world is now wise to the fact that US criticism of the new venture is very likely nothing more than an attempt by The White House to undermine Chinese regional ambition:

...and that means in short order Australia and South Korea will likely be on board and at that point, the stigma the US has created around membership will have completely disappeared (if it hasn’t already), opening the door for other US “allies” to join despite the bank’s alleged “low” standards.

Now, it appears the last valuable friend the US has in the bid to keep China from undercutting the ADB is beginning to consider a bid to join up. Here’s more from Reuters:

Japans foreign minister signaled cautious approval of the institution that the United States has warned against…

The opposition to the AIIB began crumbling after Britain said earlier this month that it would join the institution, saying it was in its national interest. France, Germany and Italy swiftly followed suit.

Australia now appears close to joining, although no formal decision has been made, and Beijing said Japan and South Korea were also considering the possibility. Asked about the three countries joining the bank, Chinas Foreign Ministry said it was "open" to it.

"They have all already expressed that they are contemplating the issue at hand," ministry spokesman Hong Lei told a daily briefing. "We are open to them making the relevant decision."

Japanese Finance Minister Taro Aso said Tokyo could consider joining the China-led bank if it could guarantee a credible mechanism for providing loans.

Make no mistake, they’ll still be plenty of officials in Japan who will stick to the and fight the proposal, but the fact that the country is openly considering it when relations with China are rocky at best and when Japan is so influential in what is pretty clearly a competing institution speaks volumes about the extent to which US hegemony is waning. For his part, PM Abe is still hanging onto the same tired rhetoric:

• ABE: AIIB IS DIFFERENT TO IMF, WORLD BANK AND ADB
• ABE: NEED TO CONSIDER AIIB QUESTION CAREFULLY

As for BoJ Gov. Kuroda, he was apparently too busy buying stocks to comment.

Via Bloomberg:

Asian Development Bank and World Bank have accumulated experience in helping Asia improve infrastructure, Bank of Japan Governor Haruhiko Kuroda said Friday, declining to comment on whether Japan should participate in a new China-led lender.

Kuroda said he couldn’t respond directly when asked whether Japan should join Asian Infrastructure Investment Bank.