Chinese President Xi Jinping has launched the Asian Infrastructure Investment Bank (AIIB), an international development bank, at a lavish ceremony on Saturday in Beijing.

The development bank, seen as a top competitor of the US-led World Bank, aims to change the financial practices of global development finance and help borrowers finance their needs for basic infrastructure.

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Although Washington had earlier opposed the creation of the AIIB, its allies including Britain, Australia, Italy, Germany, Philippines, and South Korea have joined the development bank - showing belief in the growing economic clout of China.

"Asia's financing needs for basic infrastructure are absolutely enormous," Xi said in a speech at the launch.

Xi noted that the bank would invest in massive projects that are "high in quality but low cost."

Chinese Premier Li Keqiang said for Asia to continue to be the most robust and dynamic region for global economic growth, it needs to take on more infrastructure projects and AIIB is the bank to answer their needs.

The AIIB will start operations in the second quarter of 2016 and is expected to lend about $10 billion - $15 billion a year in the next five to six years.

AIIB President Jin Liqun said the bank has not taken any infrastructural projects yet. However, he expressed confidence that once operations get into full swing this month, borrowers will not have a hard time applying for loans.

Luxembourg Finance Minister Pierre Gramegna said the establishment of the AIIB was "further proof of the rebalancing of the world economy".

Financial analysts say for the AIIB to be successful, it must set apart from the rules of both the World Bank and the International Monetary Fund.

The AIIB requires infrastructural projects to be legally transparent and must take into account social and environmental interests.

Reports indicate that the AIIB, however, will not force borrowers to adopt free-market practices favored by the IMF.

TagsAsian Infrastructure Investment Bank (AIIB), International Monetary Fund (IMF)