V. Answer some questions:

1. What does a bank organization and operation depend on?

2. What types of banks do you know?

3. Do central banks provide a country with a number of services?

4. What is the aim of development banks?

5. What is the aim of commercial banks?

6. What does the full-service philosophy of many banks mean?

7. How can you explain the difference between wholesale and retail banking?

8. What three essential functions have both types of banking?

9. Why are these functions very important for bank operation?

10. What factors make banking an international business?

11. How have the major banks of the world established extensive international operations?

Литература

Основная: 1, 2, 5, 6.

Дополнительная: 1, 2, 3, 4, 11.

Topic 11.

International banking and international economic institutions world bank

Large banks today are truly transnational enterprises. International banks, like domestic banks, act as financial intermediaries. But they operate in different legal environment. The laws regulating domestic banking in each nation are typically very restrictive, yet many nations allow international banking to operate largely unregulated. Because they are not hampered by regulations, international banks typically can offer depositors and borrowers better terms than could be negotiated at a domestic bank.

The World Bank is the world’s foremost intergovernmental organization concerned with the external financing of the economic growth of developing countries. The official title of the institution is the International Bank for Reconstruction and Development (IBRD).

The World Bank's activities are focused on developing countries, in fields such as human development (e.g. education, health), agriculture and rural development (e.g. irrigation, rural services), environmental protection (e.g. pollution reduction, establishing and enforcing regulations), infrastructure (e.g. roads, urban regeneration, electricity), and governance (e.g. anti-corruption, legal institutions development).

The World Bank often relies on the IMF to encourage countries to make difficult economic reforms.

Voting power in the Bank (as well as in the IMF) is determined by the size of each member nation’s subscription. Ultimate power, through weighted voting, rests with the Board of Governors of the Bank. The governors meet annually in September. The day-to-day affairs of the Bank are determined by executive directors who live permanently in Washington, D.C. They hire a president, who, in turn, hires a staff.

The World Bank Group is a group of five international organizations responsible for providing finance and advice to countries for the purposes of economic development and poverty reduction, and for encouraging and safeguarding international investment. The group and its affiliates have their headquarters in Washington, D.C., with local offices in 124 member countries.

The World Bank Group consists of

• the International Bank for Reconstruction and Development (IBRD), established in 1945,

• the International Finance Corporation (IFC), established in 1956,

• the International Development Association (IDA), established in 1960,

• the Multilateral Investment Guarantee Agency (MIGA), established in 1988 and

• the International Centre for Settlement of Investment Disputes (ICSID), established in 1966.

The World Bank Group has had a significant positive effect on the flow of capital to the poorer countries of the world, both directly and indirectly, and knowledge of Third World problems has increased enormously.