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.
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 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 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 |
There are also several 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: 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 to United Nations regional groupings, including the Inter-American Development Bank, the Asian Development Bank; the Islamic Development Bank; the African Development Bank; the Central American Bank for Economic Integration; the European Investment Bank; and the European 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 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 |
|---|---|---|---|---|
| 1930 | BIS Bank for International Settlements | http://www.bis.org | The bank of all central banks, 60 members | Basel, Switzerland |
| 1959 | BCEAO Central Bank of West African States | Central bank of the West 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 | BEAC Bank of Central African States | Central bank of CEMAC | Yaoundé | |
| 1974 | ACU Asian Clearing Union | https://www.asianclearingunion.org/ | 9 Central Banks | |
| 1982 | SEACEN South East Asian Central Banks Research and Training Centre | http://www.seacen.org | 19 Asian central banks | Kuala Lumpur, Malaysia |
| 1998 | ECB European Central Bank | http://www.ecb.int | Central bank of the eurozone | Frankfurt, Germany |
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:
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