HANK PAULSON: 'That's bulls--t'

First, here's tiny bit of context: Earlier this month, some commentators - notably Harvard professor Larry Summers - said that the formation of the AIIB, a new international financing consortium headed by China, marked a moment that could be remembered as "the moment the United States lost its role as the underwriter of the global economic system."

In an interview with Bloomberg's Peter Cook on Tuesday, Paulson said simply: "That's bulls--t."

Paulson, the former CEO of Goldman Sachs who also served as Treasury Secretary during the financial crisis, said that the Obama administration's handling of the AIIB's formation "wasn't their finest hour."

As we've noted, the major embarrassment for the US here was that major economic allies like the UK, France, and Germany were willing to go against the Obama administration's request that they not join the AIIB in exchange for closer economic ties with China.

But that this marked a "watershed" moment declaring the end of US global economic dominance is not something Paulson was willing to consider.

In his interview with Cook, Paulson also said that China is "running out of steam" and risks a "day of reckoning" unless the country's leaders adopt a new model for municipal finances.