International financial institutions

An international financial institution (IFI) is a financial institution that has been established (or chartered) by more than one country, and hence is subject to international law. Its owners or shareholders are generally national governments, although other international institutions and other organizations occasionally figure as shareholders. The most prominent IFIs are creations of multiple nations, although some bilateral financial institutions (created by two countries) exist and are technically IFIs. The best known IFIs were established after World War II to assist in the reconstruction of Europe and provide mechanisms for international cooperation in managing the global financial system.

Types

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Multilateral Development Banks

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A Multilateral Development Bank (MDB) is a development bank, created by a group of countries, that provides financing, technical assistance and professional advice to enhance development. An MDB has many members, including developed donor countries and developing borrower countries. MDBs finance projects through long-term loans at market rates, very-long-term loans below market rates (also known as credits), and grants. Additionally, MDBs often have a geographic concentration area for their development objectives. With this geographic and thematic focus, funding for a variety of ventures – often resource-intense infrastructure projects – is provided. Since MDBs have a shareholding structure and are backed by member countries, they tend to profit from favorable loan conditions compared to other banks and can therefore take more risks in their investment strategy. [1] This aids their development-driven cause.

Since the 2020s, in the context of the G20, the World Bank-IMF Annual Meetings and other International Summits, MDBs have committed to multiple shared reform objectives. This MDBs Reform process aims to integrate MDBs in terms of operational practices, objectives, financial metrics and governance structures, enabling them to work as a system in development projects, to mobilize additional capital and achieve credit rating stability. The Capital Adequacy Framework (CAF) reform has been one of the main fields of MDB reform, aiming the enhance financing capacity and harmonize financial metrics among MDBs.[2]

The following are usually classified as the main MDBs:

There are also several "sub-regional" multilateral development banks. Their membership typically includes only borrowing nations. The banks lend to their members, borrowing from the international capital markets. Because there is effectively shared responsibility for repayment, the banks can often borrow more cheaply than could any one member nation. These banks include:

There are also several multilateral financial institutions (MFIs). MFIs are similar to MDBs but they are sometimes separated since they have more limited memberships and often focus on financing certain types of projects.

Bretton Woods institutions

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Main article: Bretton Woods system

The best-known IFIs were established after World War II to assist in the reconstruction of Europe and provide mechanisms for international cooperation in managing the global financial system. They include the World Bank, the IMF, and the International Finance Corporation. Today the largest IFI in the world is the European Investment Bank which lent 61 billion euros to global projects in 2011.

Founded Name Notes HQ
1944 IMF International Monetary Fund Specialised agency of the UN Washington, D.C.
1944 IBRD International Bank for Reconstruction and Development World Bank Group, Specialised agency of the UN Washington, D.C.
1956 IFC International Finance Corporation World Bank Group Washington, D.C.
1960 IDA International Development Association World Bank Group Washington, D.C.
1966 ICSID, International Centre for Settlement of Investment Disputes World Bank Group Washington, D.C.
1988 MIGA Multilateral Investment Guarantee Agency World Bank Group Washington, D.C.
1995 GATT General Agreement on Tariffs and Trade, basis for the creation of World Trade Organization (WTO) in 1995 The GATT is not an organisation. The WTO is not a United Nations agency Geneva for the WTO

Regional development banks

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The regional development banks consist of several regional institutions that have functions similar to the World Bank group's activities, but with particular focus on a specific region. Shareholders usually consist of the regional countries plus the major donor countries. The best-known of these regional banks cover regions that roughly correspond to United Nations regional groupings, including the Inter-American Development Bank, the Asian Development Bank; the African Development Bank; the Central American Bank for Economic Integration; and the European Bank for Reconstruction and Development. The Islamic Development Bank is among the leading multilateral development banks. IsDB is the only multilateral development bank after the World Bank that is global in terms of its membership. 56 member countries of IsDB are spread over Asia, Africa, Europe and Latin America.

Founded Name Notes HQ
1959 IDB Interamerican Development Bank Works in the Americas, but primarily for development in Latin America and the Caribbean Washington, D.C.
1960 CABEI Central American Bank for Economic Integration Central America Tegucigalpa
1964 AfDB African Development Bank Africa Abidjan
1973 IsDB Islamic Development Bank Group 56 countries in Asia, Africa, Europe, and Latin America Jeddah
1966 ADB Asian Development Bank Asia Manila
1970 CAF Development Bank of Latin America Latin America Caracas
29/5/91 EBRD European Bank for Reconstruction and Development London
1956 CEB Council of Europe Development Bank Coordinated organisation Paris
14/11/73 BOAD Banque ouest-africaine de développement West African Development Bank Union économique et monétaire ouest-africaine, Cf.BCEAO Banque centrale des États de l'Afrique de l'Ouest Lomé
1975 BDEAC Banque de developpement des États de l'Afrique centrale, Development Bank of Central African States Communauté économique et monétaire de l'Afrique centrale (CEMAC). Not to be confused with BEAC Banque des États de l'Afrique centrale Brazzaville, Congo
2006 EDB Eurasian Development Bank International financial institution promoting economic growth in the member states and Eurasian integration through investment. Almaty, Kazakhstan

Bilateral development banks and agencies

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A bilateral development bank is a financial institution set up by one individual country to finance development projects in a developing country and its emerging market, hence the term bilateral, as opposed to multilateral. Examples include:

Other regional financial institutions

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Financial institutions of neighboring countries established themselves internationally to pursue and finance activities in areas of mutual interest; most of them are central banks, followed by development and investment banks. The table below lists some of them in chronological order of when they were founded or listed as functioning as a legal entity. Some institutions were conceived and started working informally 2 decades before their legal inception (e.g. the South East Asian Central Banks Centre)

Founded Name Website Notes HQ
17/5/1930 BIS Bank for International Settlements http://www.bis.org The bank of all central banks, 60 members Basel, Switzerland
1958 EIB European Investment Bank http://www.eib.org Created by European Union member states to provide long-term finance, mainly in the EU Luxembourg, Luxembourg
2/15/1965 AACB African Association of Central Banks, ABCA Association des Banques Centrales Africaines http://www.aacb.org/ Consists of 40 African central banks Dakar, Senegal
10/7/1970 IIB International Investment Bank http://www.iib.int Consists of 4 member countries Moscow, Russia
1974 ACU Asian Clearing Union https://www.asianclearingunion.org/ 9 Central Banks
8/1976 NIB Nordic Investment Bank[7] http://www.nib.int Lending operations in its 8 member countries and emerging markets on all continents.[8] Helsinki, Finland
3/2/1982 SEACEN South East Asian Central Banks Research and Training Centre http://www.seacen.org 19 Asian central banks Kuala Lumpur, Malaysia
24/1/1997 BSTDB Black Sea Trade and Development Bank http://www.bstdb.org 11 member countries,corresponding to the Organization of the Black Sea Economic Cooperation Thessaloniki, Greece
1998 ECB European Central Bank http://www.ecb.int Central bank of 20 EU countries that have adopted the euro Frankfurt, Germany

See also

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References

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  1. ^ Humphrey, C., & Brugger. (n.d.). The Role of Multilateral Development Banks in Financing the Sustainable Development Goals [Policy Paper]. https://ethz.ch/content/dam/ethz/special-interest/gess/nadel-dam/publications/NADEL_Policy_Paper_MDB_EN_web.pdf
  2. ^ "MDBs Reform Tracker". Center for Global Development. April 11, 2024. Retrieved August 21, 2024.
  3. ^ "FMO :: About FMO". Archived from the original on 2011-09-05. Retrieved 2011-06-04.
  4. ^ "Homepage". Deginvest.de. Retrieved 2017-04-24.
  5. ^ "Home". Afd.fr. Retrieved 2016-08-01.
  6. ^ "Home". cdcgroup.com/. Retrieved 2017-09-11.
  7. ^ "Nordic Investment Bank". Nib.int. Retrieved 2016-08-01.
  8. ^ "Nordic Investment Bank - About NIB". Nib.int. Archived from the original on 2016-08-12. Retrieved 2016-08-01.
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