The planned Asian Infrastructure Investment Bank (AIIB) has over 50 members and has been designed to boost investment in areas such as transport and energy, similar to the World Bank and Asian Development Bank.
The decision comes after extensive discussions between the government, China and other key partners around the world, Hockey said.
The bank presented Australia “with great opportunities to work with our neighbours and largest trading partner to drive economic growth and jobs” he added.
“The AIIB will work closely with the private sector, paving the way for Australian businesses to take advantage of the growth in infrastructure in the region,” Hockey continued.
“The governance of the AIIB will be based on best practice, ensuring that all members will be directly involved in the direction and decision making of the bank in an open and transparent manner.
“We look forward to working with other members to lay the foundations for an effective new multilateral institution which is expected to be operational by the end of the year.”
The US and Japan have refused to join, however, warning that the AIIB could undermine existing multilateral institutions and governance standards.
In March, the UK announced that it was to become a founding member of the AIIB.
The International Monetary Fund and World Bank, earlier this year, welcomed the creation of the Beijing-based infrastructure investment bank.
