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Functions of World Bank | Functions of IMF | Structure of World Bank

Functions of World Bank | Functions of IMF | Structure of World Bank

Functions of World Bank | Functions of IMF | Structure of World Bank World Bank was founded in July 1945 in Washington along with the International Monetary Fund (IMF). The World Bank and the International Monetary Fund was created based on the Bretton Woods Conference of 1944. At that time, the main purpose of this institution was to provide loans to low-income counties. The headquarter of the World Bank and the IMF are in Washington D.C. Both organizations work closely with each other. Usually, the presidents of these both institutions come from America only. The purpose of the IMF is to establish international monetary cooperation and to develop a balanced trade on the international arena. The International Monetary Fund duly operations from 1st March 1947. At the time of the establishment of this financial institution, 40 countries were members which have now increased to 189. World bank is the international financial institution to provide loans. The institution is facilitating the capital investment by promoting international trade and foreign investment. The latest member country is Nauru, which became the 189th member country of the International Monetary Fund in April 2016. Before this, In June 2010, Tuvalu became the 188th member of the International Monetary Fund.

The latest member country is Nauru, which became the 189th member country of the IMF.

World Bank’s Vision:

The initial capital of the World bank was 10,000 million dollar.  World Bank started the business in June 1946. the purpose of World Bank was to help and reconstruct the nations which divested by World War II. World Bank changed its focus from the advanced industrialized Nations to developing countries in from 1960’s decades.

The Organisational Structural of World Bank:

World Bank primary consists of the board of governors, executive directors, and Advisory Committee.  The board of Executive directors consists of 21 members. Executive directors hold the voting power in the proportion of their respective government shareholding for their country. The president of the World bank is appointed by the board of Executive directors only. The board of directors appointed the Advisory Committee.  Advisory Committee consists of seven members. It increases time to time by the approval of member countries.  2% of assigned shares are being paid in Gold US dollar or special drawing rights by member countries.
The headquarter of the International Monetary Fund and World Bank are in Washington D.C.

Objectives of World Bank [IBRD]:

The prime objective of the world bank is to reduce poverty. World Bank provides long-term capital for economic reconstruction and development.  This institution ensures balanced development of international trade in the member countries through the investment. World Bank also ensures the implementation of developmental projects. It also provides a guarantee on private loan and capital investment.  World bank works to achieve the goal through its two institutions –
  1. The International Bank for Reconstruction and Development (IBRD) – 189 member countries
  2. International Development Association (IDA) – 173 member countries.
Each member countries of IBRD should be also a member of the International Monetary Fund (IMF). Click here to know about functions of International Development Association.

Special Drawing Rights [SDR]

The Special Drawing Rights (SDR) is an international reserve asset. It was created by the International Monetary Fund (IMF) in 1969. SDR works as a supplementary international reserve asset based on a fixed exchange rate system. The value of special drawing rights (SDR) is based on major 5 currencies – U.S. Dollar, Euro, Chinese Renminbi, Yen and British Pound Sterling. Chinese Renminbi (RMB) joined the SDR basket on 1st October 2016. The value of SDR decides in the terms of U.S.Dollar. Initially, The SDR value was defined as an equivalent to 0.888671 grams of fine gold. It was also equivalent to one U.S. Dollar.
Special Drawing Rights (SDR) do all transactions in the IMF.
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