Aninternational financial institution (IFI) is afinancial institution that has been established (or chartered) by more than one country, and hence is subject tointernational law. Its owners or shareholders are generally national governments, although otherinternational 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.
AMultilateral Development Bank (MDB) is adevelopment bank, created by a group of countries, that providesfinancing, technical assistance and professional advice to enhancedevelopment. An MDB has many members, includingdeveloped donor countries anddeveloping 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-intenseinfrastructure projects – is provided. Since MDBs have a shareholding structure and are backed by member countries, they tend to profit from favorableloan conditions compared to other banks and can therefore take more risks in theirinvestment strategy.[1] This aids their development-driven cause.
Since the 2020s, in the context of theG20, theWorld Bank-IMF Annual Meetings and other International Summits, MDBs have committed to multiple shared reform objectives. ThisMDBs 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 achievecredit rating stability. TheCapital 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 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.
The best-known IFIs were established afterWorld War II to assist in the reconstruction of Europe and provide mechanisms for international cooperation in managing theglobal financial system. They include theWorld Bank, theIMF, and theInternational 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 | IMFInternational Monetary Fund | Specialised agency of theUN | Washington, D.C. |
| 1944 | IBRDInternational Bank for Reconstruction and Development | World Bank Group, Specialised agency of theUN | Washington, D.C. |
| 1956 | IFCInternational Finance Corporation | World Bank Group | Washington, D.C. |
| 1960 | IDAInternational Development Association | World Bank Group | Washington, D.C. |
| 1966 | ICSID,International Centre for Settlement of Investment Disputes | World Bank Group | Washington, D.C. |
| 1988 | MIGAMultilateral Investment Guarantee Agency | World Bank Group | Washington, D.C. |
| 1995 | GATTGeneral Agreement on Tariffs and Trade, basis for the creation ofWorld Trade Organization (WTO) in 1995 | The GATT is not an organisation. The WTO is not aUnited Nations agency | Geneva for the WTO |
There are also several regional multilateral development banks. Their membership typically includes only borrowing nations. The banks lend to their members, borrowing from the internationalcapital 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: 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. Some banks consist of the regional countries plus the major donor countries. The best-known of these regional banks cover regions that roughly correspond toUnited Nations regional groupings, including theInter-American Development Bank, theAsian Development Bank; theIslamic Development Bank; theAfrican Development Bank; theCentral American Bank for Economic Integration; theEuropean Investment Bank; and theEuropean Bank for Reconstruction and Development.
Financial institutions of neighboring countries established themselves internationally to pursue and finance activities in areas of mutual interest; most of them arecentral 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 |
|---|---|---|---|---|
| 1930 | BISBank for International Settlements | http://www.bis.org | The bank of all central banks, 60 members | Basel, Switzerland |
| 1959 | BCEAOCentral Bank of West African States | Central bank of theWest African Economic and Monetary Union | Lomé | |
| 1965 | AACB African Association of Central Banks | http://www.aacb.org/ | Consists of 40 African central banks | Dakar, Senegal |
| 1972 | BEACBank of Central African States | Central bank ofCEMAC | Yaoundé | |
| 1974 | ACUAsian Clearing Union | https://www.asianclearingunion.org/ | 9 Central Banks | |
| 1982 | SEACENSouth East Asian Central Banks Research and Training Centre | http://www.seacen.org | 19 Asian central banks | Kuala Lumpur, Malaysia |
| 1998 | ECBEuropean Central Bank | http://www.ecb.int | Central bank of theeurozone | Frankfurt, Germany |
Abilateral development bank is a financial institution set up by one individual country to finance development projects in adeveloping country and itsemerging market, hence the termbilateral, as opposed tomultilateral. Examples include:
