Global Finacial Institutions

Global Financial Institutions

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Professor XXXX

Course XXXX

Global Financial Institutions

This briefly presents the role of global financial institutions such as the International Monetary Fund , the World Bank , and Asian Development Bank in the global financing and examines briefly their influence on exchange rate

International Monetary Fund (IMF

Established in 1944 , the IMF has a headquarters in Washington DC employs 2 ,596 staff from 146 countries , and is owned and financed by 185 member countries (IMF , 2008

Its main task is to

ensure the stability of the international monetary system - the system of exchange rates and international payments that enables countries to buy goods and services from each other (IMF 2008

To maintain stability in the international monetary system , it provides (1 ) advice on appropriate social and economic policies (2 ) financing to help member countries cope with balance of payments problems when foreign exchange payments exceed foreign exchange earnings , and (3 technical assistance and training to build needed expertise and institutions to attain economic growth (IMF , 2006

To maintain exchange rate stability , member countries prior to 1971 pegged their exchange rates that could only be adjusted with the IMF 's agreement . Since 1971 , member countries can freely select any type of exchange rate arrangement : allowing the currency to float freely pegging it to another currency or a basket of currencies adopting the currency of another country or participating in a currency bloc (IMF 2006

The World Bank (the Bank

The Bank , established in 1944 , has a headquarters in Washington DC with more than 100 country offices , and employs about 10 ,000 staff . It is owned and financed by 187 member countries (World Bank , 2008

The Bank is made up of two development institutions : the International Bank for Reconstruction and Development (IBRD , and (2 ) the International Development Association (IDA . Each institution has a role in achieving the Bank 's mission of reducing global poverty and improving living standards . The IBRD is responsible for middle income poor countries , while IDA caters to the needs of the poorest countries in the world . Both provide interest-free credit and grants , and low-interest loans to developing countries for infrastructure , health , education communications , and other purposes (World Bank , 2008

The Bank provides local cost financing for projects in non-CFP borrowing countries ' with clear indirect foreign costs and if a specific project has too little foreign exchange cost to permit the Bank to achieve its project objectives by foreign exchange financing alone (World Bank , 2007 . It also has a project preparation facility that finances foreign exchange costs (World Bank , 2007

Asian Development Bank (ADB

Established in 1966 , ADB has a headquarters in Manila with 26 country offices , and employs more than 2 ,400 staff . It is owned and financed by 67 members with 48 members from the region and other members from other parts of the world (ADB , 2008

As an international development finance institution , it helps its developing member countries reduce poverty and enhance people 's quality of life . It provides assistance...