A History of the European Union.doc

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A History of the European Union

The European Union is an alliance currently made up of 27 European nationsincluding Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia,Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Malta,Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and theUnited Kingdom. These countries band together for political and economic strength.The European Union shares decision-making authority with constituent nations; itdoesnt replace the power of sovereign nations. The motto of the European Union isUnited in Diversity, reflecting the many cultures and languages that compose thisunion (Europa 2007). The European Union states, Any European country can join,provided it has a stable democracy that guarantees the rule of law, human rights andthe protection of minorities. It must also have a functioning market economy and acivil service capable of applying EU laws (Europa 2007).

Rising from the AshesThe European Union has been a somewhat fluid concept developing for more than50 years. It stems from leaders and citizens of European nations desiring to preventthe devastation that occurred during World War II from ever happening again.Western European political leaders believed that some sort of alliance needed to beforged to help strengthen the economies and to ensure peace in European nations.French Foreign Minister Robert Schuman and French politician Jean Monnetenvisioned a gradual unification that would naturally result from European nationsworking together toward common economic goals. They believed the integrationwould benefit all countries involved. In Monnets ideal union, The means would beeconomics, but the goal was always political (Burgess 1996). On May 9, 1950,Robert Schuman presented his plan in a press conference to integrate WesternEuropes coal and steel industries.

Schumans vision eventually materialized into two treaties. The nations of Belgium,France, Germany, Italy, Luxembourg, and Netherlands signed the Treaty of Paris inApril of 1951. This treaty established the European Coal and Steel Community(ECSC). The purpose of the ECSC was to help make trading raw materials amongthe nations easier, thereby boosting their coal and steel industries. The ECSC was ahuge success, and in 1957 these same nations signed the Treaties of Rome, creatingthe European Economic Community to help encourage trade among membernations, as well as the European Atomic Energy Community, to encourage thedevelopment and production of nuclear power. These three communities wereimportant first steps in realizing Schuman and Monnets vision of uniting the nationsof Europe.

In 1967, the three communities combined to become the European Community,which helped to strengthen the economic ties among the six nations. The EuropeanCommunity, the predecessor to the European Union, was governed by three bodiescalled the European Common Assembly, the Council of Ministers, and the EuropeanCommission. In 1952, Paul-Henri Spaak was appointed president of the EuropeanCommon Assembly, which later became known as the European ParliamentaryAssembly and, finally, as the European Parliament. At first, national governmentschose members of the Parliament. It wasnt until 1979 that the control of


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Parliamentary elections was turned over to the citizens of the European Community.

The European Parliament shares legislative responsibilities with the Council ofMinisters, which is today known as the Council of the European Union (or, simply, theCouncil). The Council consists of representatives from each member country, but therepresentatives do not represent the countries themselves. Rather, each ministerrepresents a sort of task force. Councils focus on issues such as finance, agriculture,and security policies. They vote on issues pertaining to their council, not specificallyto their country of origin.

The third governing body, the European Commission, is responsible for proposingand enforcing laws and policies such as proposing the European Union budget andcreating policies on how member countries will cooperate to enforce each others civiland criminal laws. Currently there is one commissioner from each nation in theEuropean Union, but commissioners are required to act autonomously of their homecountry. They represent the interests of the European Union as a whole, notindividual countries.

From Infancy to Adolescence

Since the beginning, the European Union and its ancestor organization, the EuropeanCommunity, have striven to define and fortify themselves. Several policies developedduring the 1960s to strengthen the economy of the members of the EuropeanCommunity. In 1962, the Common Agricultural Policy was put into effect, giving theCommunity control over the production of crops by managing supply and demand offood production, subsidizing farmers wages, and overseeing the conservation ofnatural resources. In 1968, member nations removed customs duties on goods

traded within the community, thus furthering the common market vision of the 1950s.

In 1972, member nations of the European Community were eager to further thedevelopment of a European Union, but they were unsure how to go about it. Memberstates were hesitant to require nations to relinquish any additional governmentalcontrol to further the development of the Union. By the early 1980s, Altiero Spinelli,an Italian European Commissioner, was frustrated with the Unions inability to defineitself. He argued that the European Community would never progress to become aUnion because it was too weak. He wanted the Community to more aggressivelyestablish and enforce political policies, and he pushed for a more united federalistform of government. He instigated a movement for the Community to write a treaty

forming an official federalist union armed with more power to create and enforcepolicies.

Several important developments took place in the 1980s to help facilitate thedevelopment of the European Union. Altiero Spinelli spearheaded a parliamentarycommittee that wrote a draft for a treaty that would replace the existing EuropeanCommunity with a European Union. In 1984, the draft treaty was adopted by theParliament. In 1985, European Commission president, Jacques Delors, released adocument stating 279 actions that needed to be taken to fully integrate the market ofmember nations and a proposed schedule of when lawmakers should accomplishthese actions. He proposed that all 279 actions should be accomplished by

December 31, 1992. In February of 1986, member states of the European Unionsigned the Single European Act, which modified the way that decisions were made


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concerning a common market. With the Single European Act, most decisionsconcerning the common market could be made by qualified majority voting instead ofonly by a unanimous vote, with some exceptions including decisions that involvetaxes and the safety and well-being of workers. As in Jean Monnets original vision of

unification, member nations relinquished some control of their economies in order toband together for greater economic security.

By the 1990s, the idea of a European Union gained momentum and many importantdevelopments took place. One of the most significant events in the history ofEuropean integration happened on February 7, 1992, in Maastricht, Netherlands,when the Treaty on the European Union was ratified, transforming the EuropeanCommunity into the European Union. The treaty prompted member nations to createa schedule to fully integrate their economies and monetary systems. It expanded theinfluence of the European Union beyond finance to things like foreign policy anddefense. It also created a collaboration for criminal prosecution and law enforcement.

The Treaty on the European Union was the boldest step in political integration thatthe alliance had made yet.

In 1986, members of the European Community had promised to work towardcompletely integrating their markets for labor, goods, and other forms of trade. OnJanuary 1, 1993, as part of the schedule created at Maastricht the year before, Unionmembers kept that promise and established the Single European Market, whichintroduced the freedom to trade goods, services, labor, and money (Europa 2007). In1995, the Schengen Agreement made travel within the nations of France, Germany,Belgium, Luxembourg, and the Netherlands more accessible--to people of allnationalities as well as Europeans. With the Schengen Agreement, travelers are no

longer required to present passports when moving among participating countries.Nations of the European Union are not required to participate in the SchengenAgreement, and England and Ireland have chosen to reject the agreement out ofconcern for national security. To date, 24 countries, including three non-EuropeanUnion countries (Iceland, Norway, and Switzerland) have signed the agreement.

In 1997, the Treaty of Amsterdam was signed, amending the Treaty of the EuropeanUnion. The purpose of this treaty was to create the political and institutionalconditions to enable the European Union to meet the challenges of the future such asthe rapid evolution of the international situation, the globalization of the economy andits impact on jobs, the fight against terrorism, international crime and drug trafficking,ecological problems and threats to public health (Europa 2007). And in January of1999, the euro was introduced as the common currency of the European Union, butonly for commercial transactions.

The European Union Today and Beyond

The European Union of today is the realization of many of the dreams of its founders.It continues to explore new frontiers in political policy, defense, and the economy. Byearly 2002, euro notes and coins were mass distributed, replacing the local currencyin many countries of the European Union and taking economic integration one stepfurther. In March of 2003, armed forces of the European Union took over for NATOtroops in the former Yugoslavia and in Bosnia and Herzegovina. In May of 2004, tencountries from Central and Eastern Europe joined the European Union (Cyprus, theCzech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and


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Slovenia), expanding it beyond an exclusively Western Europe alliance. On February6, 2001, the European Union signed the Treaty of Nice. This treaty helped to preparethe Union for future growth by modifying the way voting takes place in the Council ofMinisters and by changing the size and composition of the European Commission

(Europa 2007).But with so many different treaties governing the European Union, decision making atthe Union level became inefficient and difficult. In an effort to simplify Unionprocesses, the European Convention was born with the main objective to write aconstitution for the European Union. A constitution was completed and signed in2004, but it was never ratified. Citizens rejected the constitution in a popular vote,and it is currently under revision.

Though the European Union is still working to more completely define itself and ironout all of the details of policy making and upholding, it has made great strides increating a more unified European continent. Collectively, it now stands as one of theworlds economic superpowers. There is a greater measure of peace among theparticipating European nations, and they are in a better position to defend themselvesfrom external threats. Citizens are at liberty to work, live, and study within the Unionas they choose. While the European Union will continue to experience growing pains,its commitment to democracy, opportunity, and improving the quality of life for allEuropeans will impact citizens within its boarders and beyond now and for years tocome.

-- Posted December 7, 2007

ReferencesEuropa: The European Union Online. 2007. Accessed: November 1, 2007.Burgess, Michael. Fall 1996. Introduction: Federalism and Building the European

Union. Publius: The Journal of Federalism 26:1-15.

OBJECTIVES OF THE EU

Objectives

PROGRESS's ultimate objective is to help achieve the goals of the Europe2020 Strategy.

3 intermediate objectives milestones towards this goal:

1. Effective application of EU rules on worker protection and

equality

Promoting better standards of inspection, monitoring and enforcementby EU countries and reviewing how EU legislation has been applied
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2. Shared understanding and ownership of EU objectives

EU countries have agreed to common guidelines and goals to inform,coordinate and strengthen national-level reforms3. Effective partnerships

Involving stakeholders throughout the policy process: problemdefinition, information gathering, consultation, development ofoptions, decision-making, implementation and evaluation

5 immediate objectives met throughout the process:

1. Effective information sharing and learning

EU and national policy- and decision-makers and stakeholderstogether identify best practice, and assessment tools to help improvepolicy-making, implementation processes and outcomes2. Evidence-based EU policies and legislation

Providing high-quality comparative policy research and analysis,collecting information that is relevant, credible and accurate in theinterest of stakeholders3. Integration of cross-cutting issues and consistency

Incorporating gender equality into all policy sections and activities andcollecting data on gender participation when relevant4. Greater capacity of national and EU networks

Investing in the capacity of national and EU networks to participate inand influence decision-making and policy implementation at EU andnational level.5. High-quality and participatory policy debateEnsuring there is productive debate at EU and national levels on law,policies and objectives, including all those affected

IMPACT/ INFLUENCE ON IB

International business is a term used to collectively describe all commercialtransactions (private and governmental, sales, investments, logistics, and

transportation) that take place between two or more nations. Usually, private

companies undertake such transactions for profit; governments undertake them for

profit and for political reasons.[1]

It refers to all those business activities which involves cross border transactions of

goods,

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GET BETTER GRADES

services, resources between two or more nations. Transaction of

economic resources include capital, skills, people etc. for international

production of physical goods and services such as finance, banking,

insurance, construction etc[2]A multinational enterprise (MNE) is a company that has a worldwide

approach to markets and production or one with operations in more

than a country. An MNE is often called multinational corporation

(MNC) or transnational company (TNC). Well known MNCs include

fast food companies such as McDonald's and Yum Brands, vehicle

manufacturers such as General Motors, Ford Motor Company and

Toyota, consumer electronics companies like Samsung, LG and Sony,

and energy companies such as ExxonMobil, Shell and BP. Most of the

largest corporations operate in multiple national markets.1.2 OBJECTIVES OF INTERNATIONAL BUSINESS

The Objectives of International business are sales expansion, resource

acquisition, risk minimization.

1.3 FACTORS THAT INFLUENCE INTERNATIONAL BUSINESS

Factors that affect...

Yes, many historians feel that WW1 was the actual start of the 20th century becauseof all the changes that resulted from it. For one, it signaled the end of European

colonialism, which also was a factor in the diminshed influence Europe had on theworld stage. Subjects in the European colonies saw that Europe was vulnerable andweren't the superpowers that the world thought they were during WW1 which lead tothe independece of many former colonies and the end of the Age of Empires inEurope. Confidence wise, Europe was also shattered because of the toll the wartook not only on the population but on general morale, remember nobody thoughtthat the war would last as long as it did, in fact, I've seen cartoons from the timewhere people were joking about being home in time for Christmas, as if the warwould only take a few months. The US was also booming at the time and Europehad to rely heavily on the US both to help man and finance the war (and therebuilding process) so that showed the world that Europe wasn't as dominant a

player on the world stage any more since they had to borrow from the "new kid onthe block." The war also affected the unity of the European countries and led tomany internal tensions between and within countries (this would play a role in theoutbreak of the Russian Revolution and later WW2) which also did its share towardsthe decline of confidence and power Europe was use to. I could go on and onbecause it is an interesting subject to me, but I think the above answers yourquestion. E-mail me if you'd like more info.

Certainly and this decline became one of the main factors that

contributed to the start of WWII and the actual failure of the League of

Nations.
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When WWI was 'finished' nearly all nations that fought in it had to deal

with large military losses, where Germany was struck the hardest since

they were forced to disarm most of their military force. Britain's

powerful empire spread across the world included Australia and New

Zealand, parts of Africa, India and certain areas in South East Asia.This empire was widely distributed around the world and demanded

Britain's military protection. Since Britain had already dealt with such

large losses and was now part of the newly established League of

Nations which demanded the military help of all members; there was

no way that Britain could add to their empire's protection. This signalled

uprising and rebellion across several colonialized countries and

became a sign of Britain's weakness. France was dealing with the

exact same issue concerning their empire of African countries and

French Indo- China. This literally meant that the two most powerful

empires before WWI were demolished and held no influencewhatsoever, which gave way for Hitler to grasp power (these are just a

few factors that contributed to his rise though).

Germany was basically humiliated and stripped of most of its products

and had to deal with an upset homefront as well as reparation bills.

Like France they were politically unstable. They needed a strong leader

to push them back up because at that moment their Kaiser had fled the

country and Germany was leaderless. The threat of communism from

the Russian homefront played a large role in the eventual rise of Hitler.Germany was incapable of even thinking of having colonies and the

ones they had were declared independent or distributed amongst other

nations.

Russia was probably the only nation that was too busy keeping a

structure for themselves than to worry about colonies. They had

stepped out of the war earlier but had dealt with extreme political

changes and and uprising social tension as well as high military losses.

Nevertheless they remained an influential power due to their size and

both Russia and the USA became the official rising world powers of

that time. Later during the 1930's Japan became significant as well as

Germany however this only occurred much later.

Since Europe had always been the conquering continent, their decline

in power was not really taken note off; only amongst their fellow

European countries. Overseas uprisings were common but it was not

as such Africa would now become the most powerful continent of the

world.


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I think the Europeans stayed very high on their horses. (unlike

ww2) They continued to play the Imperialist power game abroad,

except that the territory ruled expanded. Germany's colonies remained

colonies, only they went to other European hands. Europeans took

over many of the Ottoman Turk's old territories in the Middle East, asFrench and English had 'mandates' over Syria and Iraq; which

essentially amounted to colonialism.

The only countries that were really 'humbled' by this experience were

Germany (which soon rebounded), and Austria-Hungary, which fell

apart due to nationalist concerns. Meanwhile, there were a host of new

and smaller nations in Eastern europe, which western Europeans

hoped to exploit; and - most people felt - Communist Russia was still a

large but weak country, that would 'come to her senses' in a matter ofyears.

Europeans were not concerned with the influence of the US either, as

after the war the US went back to isolationism; refusing even to join the

League of Nations.

This is very, very different from what happened after ww2, when

Europe was so damaged that the US and USSR became the two world

super-powers.

INTERNATIONAL MONETARY FUND

The International Monetary Fund (IMF) is an intergovernmental organization thatoversees the global financial systemby taking part in themacroeconomic policies ofits established members, in particular those with an impact on exchange rate andthe balance of payments. The organization's stated objectives are to stabilizeinternational exchange rates and facilitate development through the influenceofneoliberaleconomic policies[1] in other countries as a condition of loans, debt relief,and aid.[2] It also offers loans with varying levels of conditionality, mainly topoorer

countries. Its headquarters is in Washington, D.C. The IMFs relatively high influencein world affairs and development has drawn heavy criticism from some sources.[3][4]

The International Monetary Fund was conceived in July 1944 originally with 45members and came into existence in December 1945 when 29 countries signed theagreement,[5] with a goal to stabilize exchange rates and assist the reconstruction ofthe worlds international payment system. Countries contributed to a pool whichcould be borrowed from, on a temporary basis, by countries with paymentimbalances. The IMF was important when it was first created because it helped theworld stabilize the economic system. The IMF works to improve the economies of itsmember countries.[6] The IMF describes itself as an organization of 187 countries

(as of July 2010), working to foster global monetary cooperation, secure financial
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stability, facilitate international trade, promote high employment and sustainableeconomic growth, and reduce poverty.

HISTORY OF IMF

The International Monetary Fund was conceived in July 1944 during theUnitedNations Monetary and Financial Conference. The representatives of 45 governmentsmet in the Mount Washington Hotel in the area ofBretton Woods, New Hampshire,United States, with the delegates to the conference agreeing on a framework forinternational economic cooperation.[13] The IMF was formally organized on December27, 1945, when the first 29 countries signed its Articles of Agreement. The statutorypurposes of the IMF today are the same as when they were formulated in 1943(see #Assistance and reforms).

The IMFs influence in the global economy steadily increased as it accumulatedmore members. The number of IMF member countries has more than quadrupled

from the 44 states involved in its establishment, reflecting in particular the attainmentof political independence by manydeveloping countries and more recently thedissolution of the USSR. The expansion of the IMFs membership, together with thechanges in the world economy, have required the IMF to adapt in a variety of waysto continue serving its purposes effectively.

In 2008, faced with a shortfall in revenue, the International Monetary Fundsexecutive board agreed to sell part of the IMFs gold reserves. On April 27, 2008,former IMF Managing DirectorDominique Strauss-Kahn welcomed the boardsdecision of April 7, 2008, to propose a new framework for the fund, designed to closea projected $400 million budget deficit over the next few years. The budget proposal

includes sharp spending cuts of $100 million until 2011 that will include up to 380staff dismissals.[14]

At the 2009 G-20 London summit, it was decided that the IMF would requireadditional financial resources to meet prospective needs of its member countriesduring the ongoing global financial crisis. As part of that decision, the G-20 leaderspledged to increase the IMFs supplemental cash tenfold to $500 billion, and toallocate to member countries another $250 billion via Special Drawing Rights.[15][16]

On October 23, 2010, the ministers of finance ofG-20, governing most of the IMFmember quotas, agreed to reform IMF and shift about 6 percent of the voting

shares to majordeveloping nationsand countries with emerging markets.

[17]

As ofAugust 2010 Romania ($13.9 billion), Ukraine ($12.66 billion), Hungary ($11.7billion), and Greece ($30 billion) are the largest borrowers of the fund.[18]
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IMF at a Glance

The International Monetary Fund (IMF) came into official existence on December 27, 1945,

when 29 countries signed its Articles of Agreement at a conference held in Bretton Woods,

New Hampshire, USA, from July 1-22, 1944. The IMF began financial operations on March

1, 1947.

Current Membership: 182 countries

Staff: Approximately 2,600 from 110 countries

Managing Director: Michel Camdessus assumed office in 1987

Governing Bodies: Board of Governors, Interim Committee,

Executive Board

Total Quotas: SDR 145 billion (US $195 billion)

Accounting Unit: Special Drawing Right (SDR). As of September

10, 1998, SDR 1 equaled US $1.36163.

ROLE/ FUNCTION OF IMF:

The International Monetary Fund (IMF or Fund) and the International Bank forReconstruction and Development (IBRD or World Bank) were both established at the United


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Nations Monetary and Financial Conference, held at Bretton Woods, New Hampshire, on

July 1-22, 1944. The two were created to oversee stability in international monetary affairs

and to facilitate the expansion of world trade. Membership in the World Bank requires

membership in the IMF, and they are both specialized agencies of the United Nations. The

World Bank was given domain over long-term financing for nations in need, while the IMF's

mission was to monitor exchange rates, provide short-term financing for balance of paymentsadjustments, provide a forum for discussion about international monetary concerns, and give

technical assistance to member countries. These functions are still generally true of both

organizations, although the policies determining how they are carried out have been modified

and amplified over time.

The Fund's legal authority is based on an international treaty called the Articles of Agreement

(Articles or the Agreement) which came into force in December 1945. The first Article in the

Agreement outlines the purposes of the Fund and, although the Articles have been amended

three times in the course of the last 47 years prior to 1998, the first Article has never been

altered.

The IMF started financial operations on March 1, 1947. Drawings on Fund reserves were

made by 11 countries between 1947 and 1948, although there were no drawings in 1950 and

very few in the following years. During this time the Fund worked on its drawings policies.

One outcome was the stand-by arrangements, established in 1952, modified in 1956, and

reviewed periodically since then. Stand-by arrangements provide a procedure for drawing on

Fund resources with conditions based on a structural adjustment program for the borrower

country. Stand-by arrangements became the model for other lending procedures designed by

the Fund to meet the needs of its members.

By the mid-1970s, the Fund found itself becoming more of a lending institution than

originally envisioned. The Fund's ability to meet the needs of its members was tested when

the Organization of the Petroleum Exporting Countries (OPEC) quadrupled the price of crude

oil in 1973-1974. Prices were increased again in 1979 and in 1980. This altered the

international flow of funds as the OPEC countries' monetary reserves accumulated rapidly. At

the same time, the industrial countries experienced strong inflationary pressures. These

pressures were addressed by an increase in interest rates and a reduction of imports. This

resulted in balance of payments deficits for many of the developing countries, which were

paying more for oil, paying higher interest rates on the loans from the industrial countries,

and finding reduced markets for their exports. In response to this situation, the IMF created

an Oil Facility in 1974, and enlarged it in 1975, to aid members in balance of payments

difficulties. In addition, an Oil Facility Subsidy Account was established for the poorestcountries to alleviate the cost of borrowing under the Oil Facility. During the 1970s, although

the oil price shocks placed more countries in balance of payments difficulties and forced

many of the developing countries to borrow not only against the Fund, but also against

private banks which were receiving a surplus of OPEC petrodollars, it was generally

perceived at the time that the debt cads would be short-lived. It was not until Mexico

threatened to default on its loans in 1982 that the world monetary community realized the

extent and depth of the crisis. Throughout the 1980s the Fund played an increasingly larger

role, not only as "lender-of-last-resort," but also as mediator with debtor countries in relation

to creditor nations and private banks.

In the mid-1980s the Fund's lending operations increased dramatically. Stand-byarrangements are typically for one to three years, but the exigency of the debt crisis caused


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the Fund to devise programs for adjustment over longer periods. These are known as

extended arrangements and, with other medium-term programs, can be arranged through the

Structural Adjustment Facility or the Enhanced Structural Adjustment Facility. The terms of

a structural adjustment program, or stabilization program, are known as conditionality.

Programs include quantified targets or ceilings for bank credit, the budget deficit, foreign

borrowing, external arrears, and international reserves. They also include statements ofpolicies that the member intends to follow. Conditionality came under detailed scrutiny

during the 1980s as more and more developing countries adopted structural adjustment

programs and later were unable to meet the terms of the agreement. The philosophy of the

Fund was criticized as being too oriented to the industrial economies and not adapted to

developing economies. During the late-1980s several plans were put forth, involving not only

the Fund but the creditor nations and commercial banks as well, to reduce the debt and the

debt service payments of the debtor nations. In 1989 the Fund developed new debt reduction

guidelines, providing Fund support for commercial bank debt and debt service-reduction

operations by member countries. The debt strategy is still being assessed and its success or

failure has not been determined.

OBJECTIVES OF IMF:

The objectives of the international monetary funds are -

The main objective of the fund is to promote monetary cooperationamong the different countries of the world. The funds aims at providingand establishing multilateral payments and trade system in place ofbilateral agreements. It will try to remove all restrictions and controls onforeign exchange imposed by the It will .It will lend or sell to its member -

countries currencies of other countries. This facilitates foreign exchangetransactions among the members. The fund aims at providing short -term monetary help to member countries during emergency. The fund isalso to provide monetary help to member country in order to shorten theduration and lessen the degree of disequilibrium in their internationalbalance of payment. Another objective of the fund is to help the membercountries invest their long - term funds in profitable activities. The fund isalso to facilitate the expansion and balanced growth of international tradeand to contribute thereby to promotion and maintenance of high levels ofemployment and real income of member countries.

The IMF's fundamental mission is to help ensure stability in the international system.

It does so in three ways: keeping track of the global economy and the economies of

member countries; lending to countries with balance of payments difficulties; and

giving practical help to members.

The IMF is the world's central organization for international monetary cooperation. Itis an organization in which almost all countries in the world work together to promotethe common good. The IMF's primary purpose is to ensure the stability of the

international monetary systemthe system of exchange rates and internationalpayments that enables countries (and their citizens) to buy goods and services from


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each other. This is essential for sustainable economic growth and rising livingstandards.

The International Monetary Fund (IMF) is the intergovernmental organization that

oversees the global financial system by following the macroeconomic policies of itsmember countries, in particular those with an impact on exchange rate and thebalance of payments. It is an organization formed with a stated objective ofstabilizing international exchange rates and facilitating development through theenforcement of liberalising economic policies [3][4] on other countries as a conditionfor loans, restructuring or aid.[5] It also offers highly leveraged loans, mainly topoorer countries. Its headquarters is in Washington, D.C., United States.

Source(s):http://www.imf.org/external/pubs/ft/exrphttp://en.wikipedia.org/wiki/Internation

IMPACT / INFLUENCES ON INTERNATIONAL

BUSINESS:

Impact on access to food

A number ofcivil society organizations[41] have criticized the IMFs policies for theirimpact on peoples access to food, particularly in developing countries. In October2008, former U.S. president Bill Clinton presented a speech to theUnited

NationsWorld Food Day, which criticized the World Bank and IMF for their policieson food and agriculture:

We need the World Bank, the IMF, all the big foundations, and all the governmentsto admit that, for 30 years, we all blew it, including me when I was president. Wewere wrong to believe that food was like some other product in international trade,and we all have to go back to a more responsible and sustainable form ofagriculture.

Former U.S. president Bill Clinton, Speech atUnited NationsWorld Food Day,October 16, 2008

Impact on public health

In 2008 a study by analysts from Cambridge and Yale universities published on theopen-access Public Library of Science concluded that strict conditions on theinternational loans by the IMF resulted in thousands of deaths in EasternEurope by tuberculosis as public health care had to be weakened. In the 21countries to which the IMF had given loans, tuberculosis deaths rose by 16.6%.

In 2009, a book by Rick Rowden titled The Deadly Ideas of Neoliberalism: How theIMF has Undermined Public Health and the Fight Against AIDS, claimed that theIMFs monetarist approach towards prioritizing price stability (low inflation) and fiscalrestraint (low budget deficits) was unnecessarily restrictive and has prevented
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developing countries from being able to scale up long-term public investment as apercent of GDP in the underlying public health infrastructure. The book claimed theconsequences have been chronically underfunded public health systems, leading todilapidated health infrastructure, inadequate numbers of health personnel, anddemoralizing working conditions that have fueled the push factors driving the brain

drain of nurses migrating from poor countries to rich ones, all of which hasundermined public health systems and the fight against HIV/AIDS in developingcountries.

Impact on environment

IMF policies have been repeatedly criticized for making it difficult for indebtedcountries to avoid ecosystem-damaging projects that generate cash flow, inparticularoil, coal, and forest-destroying lumber and agriculture projects. Ecuadorforexample had to defy IMF advice repeatedly in order to pursue the protection ofits rain forests, though paradoxically this need was cited in IMF argument to support

that country. The IMF acknowledged this paradox in a March 2010 staff positionreport which proposed the IMF Green Fund, a mechanism to issueSpecial DrawingRights directly to pay for climate harm prevention and potentially other ecologicalprotection as pursued generally by otherenvironmental finance.

While the response to these moves was generally positive possibly becauseecological protection and energy and infrastructure transformation are morepolitically neutral than pressures to change social policy. Some experts voicedconcern that the IMF was not representative, and that the IMF proposals to generateonly 200 billion dollars a year by 2020 with the SDRs as seed funds, did not go farenough to undo the general incentive to pursue destructive projects inherent in the

world commodity trading and banking systemscriticisms often leveled atthe WTO and large global banking institutions.

In the context of the May 2010 European banking crisis, some observers also notedthat Spain and California, two troubled economies withinEurope and the UnitedStates respectively, and also Germany, the primary and politically most fragilesupporter of a Euro currency bailout would benefit from IMF recognition of theirleadership in green technology, and directly from Green Fundgenerated demand fortheirexports, which might also improve their credit standing with internationalbankers.

Criticism from free-market advocates

Typically the IMF and its supporters advocate a monetarist approach. As such,adherents ofsupply-side economics generally find themselves in open disagreementwith the IMF.[who?]The IMF frequently advocates currencydevaluation, criticized byproponents of supply-side economics as inflationary.

Currency devaluation is recommended by the IMF to the governments of poornations with struggling economies. Some economists claim these IMF policies aredestructive to economic prosperity.

WORLD BANK:

The World Bank is aninternational financial institution that providesloans[2] to developing countriesforcapital programmes. The World Bank's official
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goal is the reduction ofpoverty. By law,[which?] all of its decisions must be guided by acommitment to promote foreign investment, international trade andfacilitate capital investment.[3]

The World Bank differs from the World Bank Group, in that the World Bank

comprises only two institutions: the International Bank for Reconstruction andDevelopment (IBRD) and the International Development Association (IDA), whereasthe latter incorporates these two in addition to three more: [4]International FinanceCorporation (IFC), Multilateral Investment Guarantee Agency (MIGA),and International Centre for Settlement of Investment Disputes (ICSID).

HISTORY OF WORLD BANK:

The World Bank is one of five institutions created at the Bretton WoodsConference in 1944. The International Monetary Fund, a related institution, is thesecond. Delegates from many countries attended the Bretton Woods Conference.

The most powerful countries in attendance were the United States andUnitedKingdom, which dominated negotiations.[5]

Although both are based in Washington, D.C., the World Bank is, by custom, headedby an American, while the IMF is led by a European.

[edit]19451968

From its conception until 1967 the bank undertook a relatively low level oflending. Fiscal conservatism and careful screening of loan applications wascommon. Bank staff attempted to balance the priorities of providing loans forreconstruction and development with the need to instill confidence in the bank. [6]

Bank president John McCloy selected France to be first recipient of World Bank aid;two other applications from Poland and Chile were rejected. The loan was for $250million, half the amount requested and came with strict conditions. Staff from theWorld Bank monitored the use of the funds, ensuring that the French governmentwould present a balanced budget and give priority of debt repayment to the WorldBank over other governments. The United States State Department told the Frenchgovernment that communist elements within the Cabinet needed to be removed. TheFrench Government complied with this diktat and removed the Communistcoalitiongovernment. Within hours the loan to France was approved.[7]

The Marshall Plan of 1947 caused lending by the bank to change as many European

countries received aid that competed with World Bank loans. Emphasis was shiftedto non-European countries and until 1968, loans were earmarked for projects thatwould enable a borrower country to repay loans (such projects as ports, highwaysystems, and power plants).

19681980

From 1968 to 1980, the bank concentrated on meeting the basic needs of people inthe developing world.[citation needed] The size and number of loans to borrowers wasgreatly increased as loan targets expanded from infrastructure into social servicesand other sectors.[citation needed]

These changes can be attributed to Robert McNamara who was appointed to thepresidency in 1968 by Lyndon B. Johnson.[8] McNamara imported a technocratic
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managerial style to the Bank that he had used as United States Secretary ofDefense and President of the Ford Motor Company.[9] McNamara shifted bank policytoward measures such as building schools and hospitals, improving literacy andagricultural reform. McNamara created a new system of gathering information frompotential borrower nations that enabled the bank to process loan applications much

faster. To finance more loans, McNamara told bank treasurerEugene Rotberg toseek out new sources of capital outside of the northern banks that had been theprimary sources of bank funding. Rotberg used the global bond market to increasethe capital available to the bank.[10] One consequence of the period of povertyalleviation lending was the rapid rise ofthird world debt. From 1976 to 1980developing world debt rose at an average annual rate of 20%.

In 1980, the World Bank Administrative Tribunal was established to decide ondisputes between the World Bank Group and its staff where allegation of non-observance of contracts of employment or terms of appointment had not beenhonoured.

19801989

The neutrality of this article is disputed. Please see the discussion onthe talk page. Please do not remove this message until thedispute isresolved.(May 2011)

In 1980,A.W. Clausen replaced McNamara after being nominated by USPresident Jimmy Carter. Clausen replaced a large number of bank staffers from theMcNamara era and instituted a new ideological focus in the bank. The replacementof Chief Economist Hollis B. Chenery byAnne Kruegerin 1982 marked a notable

policy shift at the bank. Krueger was known for her criticism of development fundingas well as third world governments as rent-seeking states.

Lending to service third world debt marked the period of 19801989. Structuraladjustment policies aimed at streamlining the economies of developing nations werealso a large part of World Bank policy during this period. UNICEF reported in the late1980s that the structural adjustment programs of the World Bank were responsiblefor the "reduced health, nutritional and educational levels for tens of millions ofchildren in Asia, Latin America, and Africa".

1989present

From 1989, World Bank policy changed in response to criticism from many groups.Environmental groups and NGOs were incorporated in the lending of the bank inorder to mitigate the effects of the past that prompted such harsh criticism.

OBJECTIVES OF THE WORLD

BANK:

The World Bank has a primary objective of reducing global poverty by providing

loans and investments, facilitating investing and trade, and by promoting sustainableeconomic practices. In 2000, the United Nations General Assembly established eight
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Millennium Development goals aimed at halving world poverty by 2015, andimproving health, education and environmental conditions in developing countries.The World Bank is dedicated to realizing those Millennium Development goals.

Millennium Goals

o The Millennium Goals provide a set of benchmarks for reducing globalpoverty and its impacts. The goals are to eliminate poverty and hunger,to achieve universal primary education, to promote gender equality, toimprove global health care and control contagious diseases, and tohelp create more sustainable economies and economic partnerships.Beyond the general goals, the UN agreement sets specific targets for abroad range of quantifiable social welfare indicators.

Poverty Strategy Reduction Process

o The World Bank, in its efforts to achieve the Millennium Goals, has

established Poverty Strategy Reduction Processes, or PRSPs, as theframework for its international development agenda. The PRSPs defineplans, identify obstacles and measure outcomes. The frameworkemphasizes empowerment and participation of local government andcommunities in a partnership-oriented process. Consistent with theMillennium Goals, the World Bank development process recognizesthe complex nature of global poverty, and the need for acomprehensive approach to improve the entire range of contributingfactors.

Country Assistance Strategies

o The World Bank creates a Country Assistance Strategy unique to eachcountry's needs and conditions. After drafting the strategy, the bankworks with local government and civilian stakeholders to determineactual development programs and related partnerships. Given its focuson the poorest countries, the World Bank dedicates considerableresources to agricultural economies, seeking to improve productivityand competitiveness, and to aid the growth of rural farm and non-farmsectors. The World Bank also is heavily involved in financing andinvesting in large-scale infrastructure projects in developing countries.

ROLE/ FUNCTION OF WORLD BANK:

One of the most daunting entities in contemporary culture has to be the

World Bank. There are some who claim it is behind everything thats

wrong with the world today, and others who claim its devoted to helping

the economies of other nations to grow and thrive. There is probably more

than a hint of truth in both of these positions, but to get an understanding


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of it, its a good idea to go back to its origins, and then there might be

opportunities to find out what its objectives are.

The World Bank began in 1945 as an organization that was devoted to

lending money to developing nations at a low interest rate. The origins of

the world bank are absolutely connected with free trade, by allowing them

a chance to compete in the world marketplace. Free trade is a complex

thing, because on the surface, it seems to be a rather simple and efficient

way of making it possible to move money and products between

countries. It would be easy enough to see it as that, but the system

underneath this reveals a much more complicated picture, and this is

where the complexity just begins.

By offering loans to developing nations, there isnt simply a beneficent

goal behind the lending, but is connected to a much larger chain of

economies. Encouraging these countries to spend money that they dont

have always puts the lender at risk of greater loss in the future. It also

helps to bolster other, developed countries economies when they are at a

decline. So there is a great potential for exploitation here, and this was

evidenced by the beginning of the 1980s, when World Bank policies

encouraged spending at the cost of neglecting health care, education, and

other human necessities.

Since the 80s, theyve been making some attempts to turn around their

reputation, which suffered the most damage from criticisms of groups as

recognized as UNICEF, although many critics say there is still a long way

to go, and that corruption still exists on very profound levels. However,

their objectives, at least formally, are still basically philanthropic. The

main impetus behind its beginnings is still part of the discourse, where itis supposed to have the function of helping to lend a hand to countries

whose economies are struggling. They also have as one of their primary

functions the mandate to help rebuild infrastructures so that the

economies can become more stable, and there are educational programs

in place to help them to continue to stay on track. At its core, then, its

designed to build up struggling nations, with a theory that is fairly true to

its origins, but a practice that many find suspicious.


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commonly known as World Bank, was result of the Bretton Woods

Conference. The main objectives behind setting up this international organisationwere to aid the task of reconstruction of the war-affected economies of Europe and

assist in the development of the underdeveloped nations of the world. For the first

few years, the World Bank remained preoccupied with the task of restoring war-tornnations in Europe. Having achieved success in accomplishing this task by late

1950s, the World Bank turned its attention to the development of underdeveloped

nations. Over the time, additional organisations have been set up under the umbrellaof the World Bank.

As of today, the World Bank is a group of five international organisations responsible

for providing finance to different countries. As mentioned earlier, the World Bank is

entrusted with the task of economic growth and widening of the scope ofinternational trade. During its initial years of inception, it placed more emphasis on

developing infrastructure facilities like energy, transportation and others. No doubt all

this has benefited the under-developed nations too, but the results were not found tobe very satisfactory due to poor administrative structure, lack of institutional

framework and non-availability of skilled labour in these countries. Realising these

problems, the World Bank later decided to divert resources to bring about industrial

and agricultural development in these countries.

Assistance is extended to different countries for raising cash crops so that their

incomes rise and they may export the same for earning foreign exchange. The bank

has also been providing resources for education, sanitation, health care and smallscale enterprises. Today, the services provided by the World Bank have increased

manifold. The World Bank is no longer confined to simply providing financial

assistance for infrastructure development, agriculture, industry, health and

sanitation. It is rather significantly involved in areas like removal of rural povertythrough raising productivity, increasing income of the rural poor, providing technical

support, and initiating research and cooperative ventures. The group and its affiliates

headquartered in Washington DC catering to various financial needs are listed belowon World Bank and its affiliates. World Bank and its Affiliates

ASIAN DEVELOPMENT BANK

The Asian Development Bank (ADB) is a regional development

bank established on 22 August 1966 to facilitate economic development of countries

in Asia.[2]The bank admits the members of the United Nations Economic and Social

Commission for Asia and the Pacific(UNESCAP, formerly known as the United

Nations Economic Commission for Asia and the Far East) and non-

regional developed countries.[2]From 31 members at its establishment, ADB now

has 67 members - of which 48 are from within Asia and the Pacific and 19 outside.

ADB was modeled closely on the World Bank, and has a similar weighted voting

system where votes are distributed in proportion with member's capital subscriptions.

At present, both the United States and Japanhold 552,210 shares, the largest
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proportion of shares at 12.756% each.[3]China holds 228,000 shares

(6.429 %), India holds 224,010 shares (6.317 %), the 2nd and 3rd largest proportion

of shares respectively.

HISTORY OF ASIAN DEVELOPMENT BANK:

1962-1972

ADB was originally conceived by some influential Japanese who formulated a"private plan" for a regional development bank in 1962, which was later endorsed bythe government. The Japanese felt that its interest in Asia was not served by theWorld Bank and wanted to establish a bank in which Japan was institutionally

advantaged. Once the ADB was founded in 1966, Japan took a prominent position inthe bank; it received the presidency and some other crucial "reserve positions" suchas the director of the administration department. By the end of 1972, Japancontributed $173.7 million (22.6% of the total) to the ordinary capital resources and$122.6 million (59.6% of the total) to the special funds. In contrast, the United Statescontributed only $1.25 million for the special fund.

The ADB served Japan's economic interests because its loans went largelyto Indonesia, Thailand, Malaysia,South Korea and the Philippines, the countries withwhich Japan had crucial trading ties; these nations accounted for 78.48% of the totalADB loans in 1967-72. Moreover, Japan received tangible benefits, 41.67% of the

total procurements in 1967-76. Japan tied its special funds contributions to itspreferred sectors and regions and procurements of its goods and services, asreflected in its $100 million donation for the Agricultural Special Fund in April 1968.

Takeshi Watanabe served as the first ADB president from 1966 to 1972.

1972-1986

Japan's share of cumulative contributions increased from 30.4 percent in 1972 to35.5 percent in 1981 and 41.9 percent in 1986. In addition, Japan was a crucialsource of ADB borrowing, 29.4 percent (out of $6,729.1 million) in 1973-86,compared to 45.1 percent from Europe and 12.9 percent from the United States.

Japanese presidents Inoue Shiro (197276) and Yoshida Taroichi (197681) tookthe spotlight. Fujioka Masao, the fourth president (198190), adopted an assertiveleadership style. He announced an ambitious plan to expand the ADB into a high-impact development agency. His plan and banking philosophy led to increasingfriction with the U.S. directors, with open criticism from the Americans at the 1985annual meeting.

During this period there was a strong parallel institutional tie between the ADB andthe Japanese Ministry of Finance, particularly the International Finance Bureau(IFB).

Since 1986

Its share of cumulative contributions increased from 41.9 percent in 1986 to 50.0per- cent in 1993. In addition, Japan has been a crucial lender to the ADB, 30.4
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percent of the total in 1987-93, compared to 39.8 percent from Europe and 11.7percent from the United States. However, different from the previous period, Japanhas become more assertive since the mid 1980s. Japan's plan was to use the ADBas a conduit for recycling its huge surplus capital and a "catalyst" for attractingprivate Japanese capital to the region. After the 1985 Plaza Accord, Japanese

manufacturers were pushed by high yen to move to Southeast Asia. The ADB playeda role in channeling Japanese private capital to Asia by improving localinfrastructure.[2] The ADB also committed itself to increasing loans for social issuessuch as education, health and population, urban development and environment, to40 percent of its total loans from around 30 percent at the time.[2]

Objectives OF ADB

The main goal of the e-Asia program is to contribute to poverty reduction and

economic and social development in DMCs by reducing the digital divide. The

objectives of the e-Asia program are to strengthen the capacity of DMCs, and to

provide technical assistance (TA) for promoting ICT and closing the digital divide,

especially through national and regional strategies such as e-government, e-health,

e-learning, e-trade, e-commerce, e-finance, e-procurement, and e-environment.

The main goal of the knowledge partnership program is to reduce poverty and

promote economic and social development in DMCs by sharing information and

knowledge. The objective of the program is to strengthen the capacity of DMCs by

providing knowledge and sharing experiences, information and knowledge in the

region for poverty reduction and social development. The knowledge partnershipprogram is also expected to promote the facilitation of information and knowledge

sharing and increase the effectiveness of poverty reduction activities.

The Technical Assistance (TA) contributed to increasing road safety in thePeople's Republic of China (PRC) by

raising public awareness and strengthening capacity of the Ministryof Public Security (MPS) in traffic safety, planning, and management

helping the Government of the People's Republic of China

disseminate the findings of previous ADB TAs on road safety to allthe PRC provinces assessing the need for further capacity building in the MPS and the

provincial public security bureaus

Scope

review PRC traffic legislation and prosecution patterns, rules, andregulations

review PRC traffic management and accident systems develop action plan for new technologies develop training sessions conduct overseas study tours
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prepare an audiovisual package and promotional materials disseminate the findings of previous ADB TAs on road safety to all

provinces in the PRC provide an appropriate level of reporting to MPS and ADB assess the need for further capacity building in MPS and the

provincial public security bureaus, and develop a framework for aloan project

The overall objective of organizational change is to enhance ADB s? development impact by strengthening its capacity to deliver its strategicagenda through a carefully planned, selective, country-focused, andtechnically excellent program of assistance to its DMCs and subregions.Drawing on the discussion in chapter III, a number of principles havebeen developed to guide the analysis of options to meet this objective.

i. Mainstream Governance and Capacity Building,Environmental and Social Development, and Private SectorDevelopment. Operational departments should be responsible foraddressing and delivering products for meeting these objectives a? process often known as mainstreaming. Delivery of products and? ? services in these areas should be organizationally separated frompolicy development and compliance oversight.

ii. Balance Country and Sector Considerations. Countryconsiderations and priorities should drive sector and projectdecisions. However, measures are also needed to ensure that sect

oral expertise is preserved. The functional responsibilities of sectorunits should be realigned with ADB s current strategic priorities.?

iii. Strengthen ADB s Regional Role and Identity.? The country andsector focus should also support ADB s regional role. The? organization structure should institutionalize the regional role ofADB and facilitate linkage with regional institutions.

iv. Greater Client and Stakeholder Orientation. Whateverorganization structure is adopted, ADB should become a moreoutward-looking, client focused, and collaborative developmentpartner.

v. Maintain Technical Excellence and Skills. Maintenance oftechnical excellence is essential for effective project design anddelivery.

vi. Emphasize Effectiveness and Efficiency. Development impactdepends on the efficiency and effectiveness of assistance. ADBjustifiably takes pride in being the most efficient of the MDBs. It is? ? also important to find means to enhance effectiveness throughstructural changes that emphasize implementation and outputs thatcan be monitored for their impact.

vii. Maintain Checks and Balances Consistent withEffectiveness. Every organization needs a clear set of checks andbalances to ensure compliance with its policies and procedures;


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maintain the quality of its output, and reduce the impact of conflictsof interest. However, such checks and balances should not stifleinitiative or reduce the effectiveness of delivery of services to DMCs.

viii. Clarity of responsibility and Value Addition. Each separate unitand position within an organization should be justified on the basis

of the value it adds to output and should be held accountable for aunique set of results. There is great potential to streamline,increase productivity, and improve motivation by the application ofthe value-added principle to units, positions, and processes, all ofwhich finally contribute to overall organizational effectiveness.Duplication of responsibility should be avoided.

ix. Ownership of Change. Organizational change must have thebacking and ownership of the staff affected by it, so that staffmorale is maintained and the changes can be smoothly andsuccessfully implemented.

x. Continuity in Change. Changes should be made only where theyadd value to the organization, and should be implemented in waysthat minimize disruptions to operations and in services to clients,maintain continuity of approach, and preserve institutional memory.

xi. The main objectives of ADB, as laid down in its Charter, are "to foster

economic growth and cooperation in the region of Asia and Far East, and to

contribute to the acceleration of the process of economic development of the

developing members in the region, collectively and individually." The Bank

aims at achieving this broad objective through the following functions:

xii. (i) Mobilization and promotion of investment of private and public capital for

productive purposes.

xiii. (ii) Utilization of its resources for financing those development projects which

contribute most to the harmonious economic growth of the region as a whole,

with special emphasis on the needs of the smaller or less developed members.

xiv. (iii) Coordination of plans and policies of the member countries with a view to

achieving better utilization of their resources, making them economically

more complementary, and expanding their foreign trade.

xv. (iv) Provision of technical assistance to the member countries for the

preparation, financing and execution of development projects.

xvi. (v) Cooperation with the United Nations and its various organs and other

international organizations with the objective of persuading them to make

investments in this region.

xvii. (vi) Undertaking of such other activities which may help to achieve its main

objectives.

ROLE/FUNCTION OF ADB :


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ADB defined itself initially as a project-financing institution whoseprincipal objective was to promote economic development. Its role duringits first quarter century reflected that definition. However, as the social,economic, and political situation of the region evolved, so did ADB s role? in serving its region. ADB reoriented its focus during the 1980s away from

projects as such, to policies and institutions within the context of countrystrategies and sector policy papers. A 1989 external panelreport17 recommended expanding ADB s role to include support for social? development, thus recognizing that development does not simply meanthe economic growth that was ADB s earlier primary focus. During the? 1990s, ADB increasingly focused on crosscutting issues such as goodgovernance, environmental protection, private sector development, andsocial development. In 1999, ADB strongly reaffirmed that its overarchingpriority is poverty reduction.

33. To facilitate its support for regional development, ADB has declaredits intention to become a broad-based development institution that playsa number of roles and is not merely a provider of funds. ADB s focus on? poverty reduction confirms a change in attitude to development. WhileADB s comparative advantage lies in its knowledge of the region, it has? the ability to offer finance and act as a catalyst for cofinancing, maintainlong-term commitment, facilitate exchange of regional experience,provide technical expertise, be a source of policy advice, support sectorand policy studies, and provide training for capacity building in such keyareas as finance and governance.

34. As applied to the education sector, ADB s evolving role suggests that? greater attention will be given to providing advice on education policiesand finance, especially as these relate to achieving poverty reduction,through enhanced policy dialogue. It also suggests that ADB will moreactively facilitate exchange of regional experience in key aspects ofeducational development, for example, policy reform, good practices inpromoting quality and equity, and effective strategies for strengtheningthe use of information technology in education. ADB s changing role? implies as well that more attention should be given in the education

sector to defining the overall policy environment, building capacity in thesector, and introducing innovative approaches to address enduring issues.At a time when rapid technological change and a more competitiveeconomic environment demand innovative responses, ADB should playthe role of helping introduce, explain, plan, monitor, and institutionalizekey innovations. Perhaps the most important role, however, is for ADB touse its vision and experience to help its DMCs develop policies andimplement programs designed to ensure equitable access of the poor toquality education at all levels.

ADBs Role


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The Asian Development Bank (ADB) is committed to playing a catalyticrole. At a time when so many private PRI providers have had theircapacity, tenors, and ratings cut, sometimes severely, the ADBscapabilities in terms of lending and providing creative credit enhancementtools such as PRI, remain unchanged. The ADB remains triple-A rated,

and its ability to provide loans and guaranties is unhindered.

One of the ADBs missions is to fill the gap created by the normaloperation of the capital markets. One objective is to push the envelopeand support transactions in countries that other bankers and insurers arereluctant to support. These challenging environments from among the 62-nation family of ADB member countries are where the ADB prefer to dobusiness. At no time has this been more important than right now.

Ultimately it will be up to Multilateral Development Banks (MDBs), like the

ADB, to craft new solutions to some of the structural problemsconfronting the international banking and trading system. Indeed, that isan important function of such institutions. Fostering regional cooperationis perhaps one of the most important roles institutions can play.

For example, the ADB is currently promoting the ASEAN + 3 BondInitiative, whose objective is to develop efficient local bond markets inAsia that will enable the private and public sectors to raise and investlong-term capital without currency and maturity risks. This initiative willfacilitate access to the market by a wider variety of issuers while creatingan environment conducive to developing local bond markets. ADB hasalso recently created a terrorism insurance facility for Pakistana countrywhere few foreign insurers are prepared to provide such coverage.

Often, ADB involvement adds an impetus to expand the range of activitiesa PRI provider may become comfortable in supporting. Its Guarantor-of-Record program, wherein ADB lends its good name and ultimately, itspaper, to lead PRI placements, has proven to be a popular tool to expandthe range and scope of pri

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