GLOBAL FINANCIAL INSTITUTIONS.ppt class presentation

GLOBAL FINANCIAL INSTITUTIONS.ppt class presentation

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  International Organizations GLOBAL FINANCIAL/ECONOMICINSTITUTIONS BY STEVE KORIR
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  Introduction • The WorldBank was created at the 1944 Bretton Woods Conference, along with the International Monetary Fund (IMF). • The President of the World Bank is traditionally an American while the MD of the IMF has been from Europe. • The World Bank and the IMF are both based in Washington, D.C., and work closely with each other. • Although many countries were represented at the Bretton Woods Conference, the United States and the United Kingdom were the most powerful in attendance and dominated the negotiations.
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  • The intentionbehind the founding of the World Bank was to provide temporary loans to low-income countries that could not obtain loans commercially. The Bank may also demand policy reforms from recipients • World Bank is owned and directed by its member countries. Each country subscribes to shares in an amount based on its relative economic strength. Each has 250 votes plus one vote for each share of stock it holds World Bank
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  Objectives • I. Helpsin inducing long-term capital for improving the balance of payments and thereby balancing international trade. • II. Helps by providing guarantees against loans granted to large and small units and other projects for the member nations. • III. Ensures that the development projects are implemented. Thus, it brings a sense of transparency for a nation • IV. Promotes capital investment for member nations by providing a guarantee for capital investment and loans. • V. If the capital investment is not available then it provides the guarantee and then IBRD provides loans for promotional activities on specific conditions
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  Functions • 1 Helpswar-devasted countries by granting them loans for reconstruction. • 2 Provide extensive experience and the financial resources of the bank help the poor countries increase their economic growth and reducing poverty • 3 Helps underdeveloped countries by granting development loans. • 4 Provides loans to governments for education, health, agriculture, etc. • 5 Promotes foreign investments to other organizations by guaranteeing the loans. • 6 Provides economic, monetary, and technical advice to the member countries • 7 Encourages the development of industries in underdeveloped countries by introducing various economic reforms.
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  International Monetary Fund •An intergovernmental organization (IGO) that coordinates international currency exchange, the balance of international payments, and national accounts. • IMF can be described as an international organization that promotes global economic growth and financial stability, encourages international trade, and reduces poverty. • Quotas of member countries are a key determinant of the voting power in IMF decisions. Votes comprise one vote per 100,000 special drawing right (SDRs) of quota plus basic votes.
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  Functions • Surveillance • Buildingcapacity • Lending • Structural Adjustment Programs
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  Lending Criteria • Tradeliberalization • Debt servicing • Establishment of a foreign exchange market to determine the current value of the recipient‘s currency. • Privatization of government parastatals and corporations. • Rationalization of tariffs and excise duties • Removal of subsidies.