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International financial institutions (IFIs) were established after World War II to assist in European reconstruction and manage the global financial system. Major IFIs include the World Bank, IMF, regional development banks, and the European Investment Bank. IFIs provide financing for development projects through loans and grants to both developed donor countries and developing borrower countries. While IFI loans aim to reduce poverty and encourage development, some projects have caused environmental and social damage without local participation. IFIs must balance development goals with accountability and transparency.

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64 views

BM Assignment

International financial institutions (IFIs) were established after World War II to assist in European reconstruction and manage the global financial system. Major IFIs include the World Bank, IMF, regional development banks, and the European Investment Bank. IFIs provide financing for development projects through loans and grants to both developed donor countries and developing borrower countries. While IFI loans aim to reduce poverty and encourage development, some projects have caused environmental and social damage without local participation. IFIs must balance development goals with accountability and transparency.

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afrida
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© © All Rights Reserved
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Assignment

Bank Management

Submitted to,
MD. Alamgir Hossen
Assistant Professor
Institute of Business Administration
Jahangirnagar University

Submitted by,
Shajidur Rashid Sajid
ID: 1793, 23rd Batch
Institute of Business Administration
Jahangirnagar University

Date of Submission: 28.08.2016

Q. What are the International Financial Institutes and what are their activities?
An international financial institution (IFI) is a financial institution that has been established (or
chartered) by more than one country, and hence are subjects of 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.
Today, the world's largest IFI is the European Investment Bank, with a balance sheet size of
Euros 512 billion in 2013. This compares to the two components of the World Bank, the IBRD
(assets of $358 billion in 2014) and the IDA (assets of $183 billion in 2014). For comparison,
the largest commercial banks each have assets of $2,000-3,000 billion.

Types of IFIs
Multilateral development bank
A multilateral development bank (MDB) is an institution, created by a group of countries, that
provides financing and professional advising for the purpose of development. MDBs have large
memberships including both developed donor countries and developing borrower countries.
MDBs finance projects in the form of long-term loans at market rates, very-long-term loans (also
known as credits) below market rates, and through grants.
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.
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
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.

Regional development banks


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 bestknown 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.

Bilateral development banks and agencies


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.

Other regional financial institutions


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).

Roles of International Financial Institutions


The roles of international financial institutions are regulated by the international laws as they are
operational in more than one country. The shareholders or the owners of the international
financial institutions are national governments of the countries.
The IFIs, and in particular the World Bank, are a primary source of development knowledge,
publishing research that frames the debate on development issues. Other donor institutions often
take their lead from the World Bank and the IMF, thus amplifying the impact of those
institutions lending approaches and decisions.
IFI loans to finance investment projects and policy reforms in developing countries are intended
to reduce poverty and encourage economic development. However, ill-conceived IFI loans have

often caused widespread environmental and social damage including irreversible impacts on
natural habitats, displaced communities, and indigenous peoples.
IFI activities are often carried out without the informed participation of affected people, nongovernmental organizations (NGOs), and-in many cases-even the legislatures of the Banks
borrowing countries. Moreover, despite some progress the IFIs still do not release
comprehensive information in a timely manner during project design and implementation.
Finally, as publicly financed institutions, the IFIs should be held accountable for the
consequences of the funds they loan to developing countries.
The international financial institutions (IFI) are getting involved in the conflicting situations very
easily due to various international laws. It is widely believed that structural and political
concerns of the countries cause obstacles to the development of roles of international financial
institutions. This is caused mainly due to the international humanitarian laws. On the other hand,
it is also believed that the roles of international financial institutions in the international
community help them to make contribution to the enforcement and implementation of the
international humanitarian laws.
The involvement of IFI in international humanitarian law can also be helpful to the United
Nations in supporting its efforts to prevent violations of the international humanitarian law.
It is also helpful to enforce the law against those who are suspected of committing atrocities. The
International Monetary Fund (IMF) and World Bank are the specialized financial agencies of the
United Nations that function as independent international organizations. Their functionalities are
not bound by the UN decisions but are regulated by the UN Security Council resolutions.
The decisions made by the IFIs may be significantly influenced by the international humanitarian
law violations. The humanitarian law violations are licit economic concern to the IFIs and that
should not be excluded from its consideration as political issues.
It is also argued that IFIs need to consider international humanitarian law issues in some
circumstances to fulfill their authorizations. The violations of rights under humanitarian laws can
give insight into how the governments will handle the international obligations like loan
agreements with the IMF or the World Bank. It is also seen that human rights violations during
the conflicts can affect the economic growth of a country. It may also affect the states ability to
service its debts, financial success of development programs and also the IFIs ability to
supervise and manage the projects. Having information about such humanitarian law violations
will thus help IFIs to ensure that they can fulfill their authorizations.

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