What is the World Bank?

Published by Thomas Herold in Banking, Economics, Investments

'World Bank' is explained in detail and with examples in the Investments edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

The World Bank proves to be an institution in international finance. It offers developing countries of the planet leveraged loans to help out with funding capital programs. The major goal is to cut down on poverty. Every decision that the organization enacts is required to be carried out with the objectives of encouraging international trade, foreign investment, and facilitate capital investment.

The World Bank should not be confused with the World Bank Group. The World Bank is two of the five organizations within the World Bank Group. These two groups that make up the World Bank are the IDA, or the International Development Association, and the IBRD, or International Bank for Reconstruction and Development. The World Bank Group is also made up of MIGA, or the Multilateral Investment Guarantee Agency; the IFC, or International Finance Corporation; and the ICSID, or International Center for Settlement of Investment Disputes.

The World Bank’s two organizations are widely supported by the nations of the world. The International Development Association contains one hundred and sixty-eight members, while the International Bank for Reconstruction and Development is comprised of one hundred and eighty-seven countries. Exclusively members of the IBRD may belong to the various other organizations in the World Bank. All IBRD members are supposed to belong to the IMF, or International Monetary Fund, as well.

The year 2010 saw significant revisions to the allocated votes of members of the World Bank. Developing countries, especially China, gained a larger voice. The nations that possess the biggest voting power currently are the United States at 15.85%, Japan at 6.84%, China at 4.42%, Germany at 4%, Great Britain at 3.75%, and France at 3.75%.

These changes are called the Phase Two of the Voice Reform. They also gave major votes percentages to countries such as India, Brazil, Mexico, and South Korea. To come up with the extra votes, the voting percentages of the majority of developed nations declined. Russia, the United States, and Saudi Arabia’s votes did not change.

The World Bank focuses on reducing the poverty found in the poorest developing countries in the world. They do this analyzing a nation’s economic and financial condition and comparing it against a snap shot of many local groups in the country. Then it comes up with unique strategies for addressing the problems of the given country. After this, the country’s government lays out their biggest priorities for reducing poverty, so that the World Bank can line up its help to work together with this government.

Besides giving out money to the poorest countries on the earth, the World Banks heads several other initiatives. They are managers of the Clean Technology Fund. They also run the Clean Air Initiative.

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The term 'World Bank' is included in the Investments edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.