Why Europe dismisses U.S. concerns and to join AIIB(2)

Nonetheless, some senior U.S. officials still see the AIIB as a Chinese ploy to reduce its influence over the international banking system. The United States has sought to persuade regional allies such as Australia, South Korea and Japan to snub the bank. However, Australian Prime Minister Tony Abbott said at the weekend he had yet to make a final decision on whether or not to join.

While Japan is unlikely to join the AIIB, the Japanese head of the Asian Development Bank, Takehiko Nakao, has said that the two institutions were in discussions and might work together.

Unusually, the United States even appeared to criticize Britain, one of its closest allies, for becoming a founding member of the AIIB. But significantly, the British government shrugged off the U.S. unease. "There will be times when we take a different approach," a spokesperson for British Prime Minister David Cameron said.

British finance minister George Osborne hailed the country's participation. He said that joining the AIIB at the founding stage would create "an unrivalled opportunity for the UK and Asia to invest and grow together," underlining that this was one diplomatic mission in which the United States had not got its own way.

Another British government official, who would not be named, said that with Britain's long-term participation in the European Union in doubt, it made sense to cement trade ties with China and the Asian markets.

Meanwhile, the Obama administration has upped pressure on the U.S. Congress to approve reforms that would allow emerging powers such as China to have more say in the running of the IMF.

"Critically, we are seeking Congressional approval of the IMF quota and governance reforms," Lew told a hearing of the House of Representatives financial services committee on Tuesday. "Our international credibility and influence are being threatened," he admitted.

Lew noted that due to delays in introducing reforms, emerging-market powers were making parallel multilateral financial institutions of their own.

As a result, BRICS nations announced their own development bank in 2014, and now, he said, China had launched the AIIB.

Italy's leading business newspaper Il Sole 24 Ore has also criticized the U.S. "contradictory position."

It noted that the United States had "reacted badly to the participation of several European countries, including Italy, in the AIIB. But if the United States paralyzes the international system that it leads, there's no surprise in European nations trying to build their own bridge with Beijing for growth and development."