Globalization of Financial Markets in detail

IMF (International Monetary Fund) is an organization of 190 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
IBRD (International Bank for Reconstruction and Development comes under World Bank) Long-Term Capital Assistance
IFC (International Finance Corporation) To finance PRIVATE enterprises in the form of loans & equity
IDA (International Development Agency) Affiliate of World Bank Soft – Loan window of the Bank. Mainly for developing & under-developed nations. Re-payment period upto 50 years Govt. & Private, both, eligible.
MIGA (Multilateral Investment Guarantee Agency) – an affiliate of World Bank (1988).Provides guarantee for investment in needy countries.

1. Globalization of Financial Markets

2. GLOBAL FINANCIAL SYSTEMS IMF (International Monetary Fund) is an organization of 190 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. IBRD (International Bank for Reconstruction and Development comes under World Bank) Long-Term Capital Assistance IFC (International Finance Corporation) To finance PRIVATE enterprises in the form of loans & equity IDA (International Development Agency) Affiliate of World Bank Soft – Loan window of the Bank. Mainly for developing & under-developed nations. Re-payment period upto 50 years Govt. & Private, both, eligible. MIGA (Multilateral Investment Guarantee Agency) – an affiliate of World Bank (1988).Provides guarantee for investment in needy countries.

3. IMF - Overview The International Monetary Fund (IMF) is an organization of 190+ countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. The IMF works to foster global growth and economic stability. It provides policy advice and financing to members in economic difficulties and also works with developing nations to help them achieve macroeconomic stability and reduce poverty. With its global membership of 190+ countries, the IMF is uniquely placed to help member governments take advantage of the opportunities—and manage the challenges—posed by globalization The IMF tracks global economic trends and performance, alerts its member countries when it sees problems on the horizon, provides a forum for policy dialogue, and passes on know-how to governments on how to tackle economic difficulties The IMF provides policy advice and financing to members in economic difficulties and also works with developing nations to help them achieve macroeconomic stability and reduce poverty

4. Key IMF Activities The IMF supports its membership by providing: Policy advice to governments and central banks based on analysis of economic trends and cross-country experiences; Research, statistics, forecasts, and analysis based on tracking of global, regional, and individual economies and markets; Loans to help countries overcome economic difficulties; Concessional loans to help fight poverty in developing countries; and Technical assistance and training to help countries improve the management of their economies

5. Objectives of IMF To promote international monetary cooperation To facilitate the expansion and balanced growth of International Trade To promote exchange rate stability To make its resources available to its members who are experiencing BOP (Balance of Payment) problems To establish a multilateral system of payments IMF lends to its member countries, ensuring that, members are pursuing policies that will improve external payment problems. Commitment to implement corrective measures. To repay in a timely manner

6. IBRD (International Bank for Reconstruction and Development) Also known as World Bank. It provides long term capital assistance to developing countries. Established in 1944 at Bretton Woods Conference Membership of 188 countries. Its purpose is crediting. Its goal is to reduce poverty.

7. Functions of IBRD Assist in reconstruction and development of its member countries. Promote private foreign investment. Promote balanced growth of international trade. Assist in bringing about a smooth transition from war to peaceful economies Aims to reduce poverty in middle income and creditworthy poorer countries

8. Services Provided Basic education and health services. Safety needs. Infrastructure development. Environment protection. Private sector development. Governance and investment. Climate. Technical assistance.

9. Goals of IBRD Wipe out extreme poverty and hunger. Offer all children a good basic education. Help women get equal rights and empower them. Reduce death rate of young children. Improve the health of mothers. Combat HIV/AIDS, malaria and other diseases. Help countries protect their environment. Promote a global partnership for development.

10. IFC (International Finance Corporation) It offers investment, advisory and asset management services to encourage private sector development in developing countries. Established in 1956. Has 184 member countries. To join IFC a country must first be a member of IBRD. Headquartered in Washington DC. Primary objective is to improve the quality of lives of the people in its developing countries. Helps private companies to mobilize financing international financial markets and also provides advice and technical assistance to businesses and governments. It’s a corporation where shareholders are member governments that provide paid-up capital and consists of 25 executive directors. The executive director from India represents a constituency of 4 countries India, Bangladesh, Bhutan and Srilanka .

11. Objectives of IFC To invest in productive private enterprises in association with other private investors and without Govt. guarantee of repayment in cases where sufficient private capital is not available on reasonable terms. To bring together investment opportunities, private capital and experienced management. To help in stimulating the productive investment of private capital, both domestic & foreign.

12. Goals of IFC Sustainable agriculture opportunities. Improve health and education. Increase access to financing for microfinance and business clients. Advance infrastructure. Help small business grow revenues. Invest in climate health.

13. Purpose of forming IFC Create opportunities for people to escape poverty and achieve better living standards by mobilizing financial resources for private enterprise. Promoting accessible and competitive markets. Supporting business and other private sector entities. Creating jobs and delivering necessary services to those who are poverty stricken.

14. IDA (International Development Association) It offers concessional loans and grants to the world’s poorest developing countries. Established in the year 1960. Headquartered at Washington D.C. Has a membership of 173 countries. It is the world banks fund for the poorest countries Provides support for health education, Infrastructure, agriculture, economic and institutional development to 82 countries – 40 of them in Africa.

15. Role and Functions of IDA About 1/5th of IDA funding is provided as grants, the rest is in the form of interest-free, long term credits. Eligibility for IDA support: It depends on- A country’s relative poverty. Non- access to private capital markets. Policy performance.

16. Exceptions to IDA Also supports some countries including several small island economies that are above the operational cut-off but lack the credit worthiness needed to borrow from IBRD. Some countries are IDA-eligible based on per capita income levels and are also creditworthy for some IBRD borrowing which are referred as Blend countries. Altogether 82 IDA-eligible countries, 64 IDA-only countries and 18 blend countries are getting assistance at present.

17. MIGA (Multilateral Investment Guarantee Agency) It offers political risk insurance. Founded in the year 1988. Headquartered at Washington D.C. Established to promote foreign direct investment in to developing countries by insuring investors against political risk, advising governments on attracting investments and mediating disputes between investors and governments. 175 member countries comprise MIGA’s shareholders. It enables the organization to intervene with host governments to resolve claims before they are filed

18. Strategic priorities of MIGA IDA-Eligible countries. In conflict affected environments. In complex projects, particularly in infrastructure and project finance deals.

19. Guarantees by MIGA Currency transfer restrictions. Expropriations. War & civil disturbances. Breach of contract. Non-honoring of sovereign financial obligations. It guarantees offer much more than just the assurance that losses will be recovered.

20. MIGA covers New, green investments. New investment contributions associated with expansion, modernization or financial restructuring of state enterprises. Acquisitions involving privatization of state enterprises