The Inter-American Development Bank (IADB) has launched a $1bn fund with the Chinese government with the intention to invest in the Caribbean and Latin America, said the bank’s President Luis Alberto Moreno late on Monday.

It is believed the move will help China strengthen its ties to prominent institutions in Mexico, Argentina and Brazil. The main target for the fund, which is to commence before the end of 2012, will be “sustainable economic development,” according to Moreno.

Additionally, the IADB confirmed that it is to create a separate contingency fund for the region, which will focus on helping various nations deal with the effect of natural disasters and assist in fighting the effects of global warming.