Japan stood out — along with the United States — among the major economies in deciding not to join the planned new China-led regional investment bank as founding members. While the government cited concerns over governance standards and operational transparency of the planned institution when it opted to not sign up by the March 31 deadline, it is obvious that Japan had chosen to keep in step with the U.S., which views the Chinese initiative to establish the Asia Infrastructure Investment Bank (AIIB) as Beijing's challenge to the post-World War II international financial order, even as roughly 50 countries — including key European powers and many U.S. allies — decided to join.

The concerns about the new bank's governance may indeed be legitimate. But there is little that Japan can do to address the AIIB's perceived problems if it remains a non-member. Japan should join the bank so it can exert influence from within to ensure that it is run according to international norms.

The planned new bank aims to fill the enormous demand for loans to finance infrastructure-building investments in the growing Asian markets, which are currently not being met by existing international financing institutions. China has said the AIIB will not compete with the World Bank or the Manila-based Asian Development Bank — which has historically been headed by officials from Japan, the largest contributor of the institution along with the U.S. — but rather complement their roles. The AIIB, which will initially be capitalized at $50 billion and later $100 billion, is to be headquartered in Beijing. China will be its largest contributor and a former Chinese finance bureaucrat is expected to be tapped as the institution's first president.