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 "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.
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 |
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 |
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:
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 |
The International Bank for Reconstruction and Development (IBRD) is an international financial institution, established in 1944 and headquartered in Washington, D.C., United States; it is the lending arm of World Bank Group. The IBRD offers loans to middle-income developing countries. It is the first of five member institutions that compose the World Bank Group. The initial mission of the IBRD in 1944, was to finance the reconstruction of European nations devastated by World War II. The IBRD and its concessional lending arm, the International Development Association (IDA), are collectively known as the World Bank as they share the same leadership and staff.
The European Bank for Reconstruction and Development is an international financial institution founded in 1991. As a multilateral developmental investment bank, the EBRD uses investment as a tool to build market economies.
The global financial system is the worldwide framework of legal agreements, institutions, and both formal and informal economic action that together facilitate international flows of financial capital for purposes of investment and trade financing. Since emerging in the late 19th century during the first modern wave of economic globalization, its evolution is marked by the establishment of central banks, multilateral treaties, and intergovernmental organizations aimed at improving the transparency, regulation, and effectiveness of international markets. In the late 1800s, world migration and communication technology facilitated unprecedented growth in international trade and investment. At the onset of World War I, trade contracted as foreign exchange markets became paralyzed by money market illiquidity. Countries sought to defend against external shocks with protectionist policies and trade virtually halted by 1933, worsening the effects of the global Great Depression until a series of reciprocal trade agreements slowly reduced tariffs worldwide. Efforts to revamp the international monetary system after World War II improved exchange rate stability, fostering record growth in global finance.
The Islamic Development Bank is a multilateral development finance institution that is focused on Islamic finance for infrastructure development and located in Jeddah, Saudi Arabia. There are 57 shareholding member states with the largest single shareholder being Saudi Arabia.
The Ministry of Commerce (MOFCOM) is a executive department of the State Council of the People's Republic of China that is responsible for formulating policy on foreign trade, export and import regulations, foreign direct investments, consumer protection, market competition and negotiating bilateral and multilateral trade agreements. it is the 20th-ranking department of the State Council. The current minister is Wang Wentao.
An export credit agency or investment insurance agency is a private or quasi-governmental institution that acts as an intermediary between national governments and exporters to issue export insurance solutions and guarantees for financing. The financing can take the form of credits or credit insurance and guarantees or both, depending on the mandate the ECA has been given by its government. ECAs can also offer credit or cover on their own account. This does not differ from normal banking activities. Some agencies are government-sponsored, others private, and others a combination of the two.
The Central American Bank for Economic Integration - CABEI was founded in 1960. It is an international multilateral development financial institution. Its resources are invested in projects that foster development to reduce poverty and inequality; strengthen regional integration and the competitive insertion of its member countries in the global economy; providing special attention to environmental sustainability. Its headquarters are in Tegucigalpa (Honduras) and has regional offices in Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica and Panama.
The African Development Bank Group is a multilateral development finance institution, headquartered in Abidjan, Ivory Coast since September 2014. The AfDB is a financial provider to African governments and private companies investing in the regional member countries (RMC).
Mahmoud Mohieldin, is an economist with more than 30 years of experience in international finance and development. He is the UN Climate Change High-Level Champion for Egypt. He is an Executive Director at the International Monetary Fund. He has been the United Nations Special Envoy on Financing the 2030 Sustainable Development Agenda since February 2020. He was the Minister of Investment of Egypt from 2004-2010, and most recently, served as the World Bank Group Senior Vice President for the 2030 Development Agenda, United Nations Relations and Partnerships. His roles at the World Bank also included Managing Director, responsible for Human Development, Sustainable Development, Poverty Reduction and Economic Management, Finance and Private Sector Development, and the World Bank Institute; World Bank President's Special Envoy on the Millennium Development Goals (MDGs), the Post-2015 Development Agenda, and Financing for Development; and Corporate Secretary and Executive Secretary to the Development Committee of the World Bank Group's Board of Governors. Dr Mohieldin also served on several Boards of Directors in the Central Bank of Egypt and the corporate sector. He was a member of the Commission on Growth and Development and was selected for the Young Global Leader of the World Economic Forum in 2005. His professional experience extends into the academic arena as a Professor of Economics and Finance at the Faculty of Economics and Political Science, Cairo University and as a visiting professor at several renowned Universities in Egypt, Korea, the UAE, the UK and the USA. He is a member of the International Advisory Board of Durham University Business School. He also holds leading positions in national, regional and international research centres and associations. He has authored numerous publications and articles in leading journals in the fields of economics, finance and development.
Development financial institution (DFI), also known as a Development bank, is a financial institution that provides risk capital for economic development projects on a non-commercial basis.
FMO is a Dutch development bank structured as a bilateral private-sector international financial institution based in the Hague, the Netherlands. FMO manages funds for the Ministries of Foreign Affairs and Economic Affairs of the Dutch government to maximize the development impact of private sector investments. It is licensed as a bank and supervised by the Dutch Central Bank.
CAF - Development Bank of Latin America and the Caribbean, formerly the Andean Development Corporation, is a development bank whose mission is to promote sustainable development and regional integration in Latin America and the Caribbean, through the financing of projects of the public and private sectors, the provision of technical cooperation and other specialized services.
Canada is a member of various international organizations and forums. Canada was a founding member of the United Nations in 1945 and formed the North American Aerospace Defense Command together with the United States in 1958. The country has membership in the World Trade Organization, the Five Eyes, the G7 and the Organisation for Economic Co-operation and Development (OECD). The country joined the Organization of American States (OAS) in 1990, and seeks to expand its ties to Pacific Rim economies through membership in the Asia-Pacific Economic Cooperation forum (APEC). Canada ratified the Universal Declaration of Human Rights in 1948, and seven principal UN human rights conventions and covenants since then. As of 2023, Canada is a signatory to 15 free trade agreements with 51 different countries, and has diplomatic and consular offices in over 270 locations in approximately 180 countries.
AccessBank Liberia (ABL), is a commercial bank with a focus on lending to micro and SME (MSME) companies. It is licensed by the Central Bank of Liberia.
Climate finance is an umbrella term for financial resources such as loans, grants, or domestic budget allocations for climate change mitigation, adaptation or resiliency. Finance can come from private and public sources. It can be channeled by various intermediaries such as multilateral development banks or other development agencies. Those agencies are particularly important for the transfer of public resources from developed to developing countries in light of UN Climate Convention obligations that developed countries have.
The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank and international financial institution that aims to collectively improve economic and social outcomes in Asia. It is the world's second largest multi-lateral development institution. Headquartered in Beijing, China, the bank currently has 109 members, including 13 prospective members from around the world. The breakdown of the 109 members by continents are as follows: 42 in Asia, 26 in Europe, 22 in Africa, 9 in Oceania, 8 in South America, and 2 in North America. The bank started operation after the agreement entered into force on 25 December 2015, after ratifications were received from 10 member states holding a total number of 50% of the initial subscriptions of the Authorized Capital Stock.
The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA), two of five international organizations owned by the World Bank Group. It was established along with the International Monetary Fund at the 1944 Bretton Woods Conference. After a slow start, its first loan was to France in 1947. In the 1970s, it focused on loans to developing world countries, shifting away from that mission in the 1980s. For the last 30 years, it has included NGOs and environmental groups in its loan portfolio. Its loan strategy is influenced by the United Nations' Sustainable Development Goals, as well as environmental and social safeguards.
The European Long-Term Investors Association (ELTI) is a trade association that represent a European-wide network of development banks or National Promotional Banks and Institutions (NPBIs).
The Sustainable Development Investment Partnership (SDIP) is an international public-private partnership which aims to use blended finance to support sustainable infrastructure investments in developing countries. The SDIP thus brings together public, private and philanthropic entities to work towards the Sustainable Development Goals (SDGs) set out by the United Nations. The SDIP was launched at the United Nations Conference on Financing for Development in Addis Ababa in July 2015 with 20 founding members, which has since risen to 42. The World Economic Forum and OECD were founding partners and provide institutional support. SDIP's inaugural meeting took place in Geneva, Switzerland on 15 September 2015.
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