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Global bank (also World Bank) is a financial institution that started operating as a result of the Bretton Woods Conference of July 1944, and started its operations on June 25, 1946. The main reason for its creation was primarily the desire to rebuild the countries of Europe and Japan, which had been destroyed by the Second World War .
Currently, the institution has 189 member countries and is based in Washington, with Jim Yong Kim as its president.
The main bodies of the Global Bank are :
- Board of Governors,
- Executive Directors (Directorate)
- President, head of the Secretariat.
Formally, each of these bodies has separate competences and improvements in relation to each of these three organisations according to their statutory provisions .
The member countries or shareholders are represented by the Board of Governors, who are the final decision-makers in the Global Bank.
The Global Bank’s mission
The Global Bank's most important mission is to reduce global poverty by helping the poorest countries and creating the right conditions for sustainable development .
Objectives of the Global Bank
When the Global Bank was set up, its main task was to help European countries rebuild after the Second World War. Today, the World Bank's most important objectives are (objectives set out in the UN Millennium Declaration) :
- eradicating poverty and hunger
- promoting universal access to education
- promoting equality between women's and men's rights
- reducing child mortality
- the improvement of material living conditions
- the fight against HIV/AIDS, malaria and other diseases
- promoting sustainable development
- measures to protect the environment.
The Global Bank is not a bank in the strict sense of the word. It provides long-term loans at preferential rates for the most needy Member States and public enterprises (after receiving government guarantees), grants, technical assistance - all for the purpose of fighting poverty and financing the development of such areas of social life as health care, education, environmental protection or the development of infrastructure. Instead, however, it requires certain political measures, such as the fight against corruption, the development of democracy or, most importantly, the development of the private sector . Funding for lending to less developed countries comes from Member States' contributions, the repayment of earlier debts by countries and the issuance of bonds on the global capital markets. Countries belonging to the International Monetary Fund may become members of the Global Bank.
Global Bank Group
The term Global Bank refers to two of the five UN specialised agencies working together in the Global Bank Group :
- The International Bank for Reconstruction and Development (IBRD)
- The International Development Association.
- The term World Bank also refers to the three other institutions that are organisationally linked but financially independent. Together they are referred to as the Global Bank Group:
- International Centre for Settlement of Investment Disputes (ICSID). Founded in 1966, it is an independent international institution created to negotiate and discuss between investors and capital importers and settle disputes between them.
The Multilateral lnvestment Guarantee Agency (MIGA) was established in 1988. It supports private investments in developing countries and investment insurance against economic risk. It supports governments seeking private investment with advice. MIGA guarantees reach USD 2 billion annually (Global Financial Development Report 2015/2016). International Finance Corporation (IFC) was established in 1956. It supports the economic development of developing countries by providing direct loans to the private sector. No government guarantees are required (as opposed to WB loans). The Corporation lends USD 2 billion annually. IFC also has the right to participate (up to 30%) in the companies to which it lends. IFC also forms lending consortia .
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Author: Justyna Wąsiołek