METAS ADVENTIST COLLEGE

DHRUV DOBARIYA

GD048 (S.Y. M.B.A.)

INTERNATIONAL FINANCE

INTERNATIONAL MONETARY FUND(I.M.F.)

SPECIAL DRAWING RIGHTS(SDRs)

WORLD BANK

Submitted To:

Rohini Maam
International monetary fund
History
How it works
Voting power
Quota system

Special drawing rights

Role of SDR
Baskets Of SDR

World Bank
Introduction
History
Various institutions comprising world bank
 International Monetary Fund (IMF)
The International Monetary Fund (IMF) is an international organization headquartered in Washington, D.C.,
of "189 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. Formed in 1944 at the Bretton Woods Conference primarily by the ideas of Harry Dexter
White and John Maynard Keynes it came into formal existence in 1945 with 29 member countries and the
goal of reconstructing the international payment system. It now plays a central role in the management
of balance of payments difficulties and international financial crises. Countries contribute funds to a pool
through a quota system from which countries experiencing balance of payments problems can borrow
money. As of 2016, the fund had SDR477 billion (about $668 billion

Through the fund, and other activities such as the gathering of statistics and analysis, surveillance of its
members' economies and the demand for particular policies, the IMF works to improve the economies of its
member countries. The organizations objectives stated in the Articles of Agreement are to promote
international monetary co-operation, international trade, high employment, exchange-rate stability,
sustainable economic growth, and making resources available to member countries in financial difficulty.

HISTORY
The IMF was originally laid out as a part of the Bretton Woods system exchange agreement in 1944. During
the Great Depression, countries sharply raised barriers to trade in an attempt to improve their failing
economies. This led to the devaluation of national currencies and a decline in world trade

This breakdown in international monetary co-operation created a need for oversight. The representatives of
45 governments met at the Bretton in the Mount Washington Hotel in Bretton Woods, New Hampshire, in
the United States, to discuss a framework for postwar international economic co-operation and how to
rebuild Europe.

There were two views on the role the IMF should assume as a global economic institution. American
delegate Harry Dexter White foresaw an IMF that functioned more like a bank, making sure that borrowing
states could repay their debts on time. Most of White's plan was incorporated into the final acts adopted at
Bretton Woods. British economist John Maynard Keynes imagined that the IMF would be a cooperative fund
upon which member states could draw to maintain economic activity and employment through periodic
crises. This view suggested an IMF that helped governments and to act as the United States government had
during the New Deal in response to World War II.
The IMF formally came into existence on 27 December 1945, when the first 29 countries ratified its Articles of
Agreement. By the end of 1946 the IMF had grown to 39 members. On 1 March 1947, the IMF began its
financial operations, and on 8 May France became the first country to borrow from it.

The IMF has played a part in shaping the global economy since the end of World War II.

Cooperation and reconstruction (194471)

As the Second World War ends, the job of rebuilding national economies begins. The IMF is
charged with overseeing the international monetary system to ensure exchange rate stability
and encouraging members to eliminate exchange restrictions that hinder trade.

The end of the Bretton Woods System (197281)

After the system of fixed exchange rates collapses in 1971, countries are free to choose their
exchange arrangement. Oil shocks occur in 197374 and 1979, and the IMF steps in to help
countries deal with the consequences.

Debt and painful reforms (198289)

The oil shocks lead to an international debt crisis, and the IMF assists in coordinating the global
response.

Societal Change for Eastern Europe and Asian Upheaval (19902004)

The IMF plays a central role in helping the countries of the former Soviet bloc transition from
central planning to market-driven economies.

Globalization and the Crisis (2005 - present)

The implications of the continued rise of capital flows for economic policy and the stability of
the international financial system are still not entirely clear. The current credit crisis and the
food and oil price shock are clear signs that new challenges for the IMF are waiting just around
the corner.
The IMF Today

Currently, there are 188 member countries in the IMF, which is based out of Washington, D.C.
Each country or region is represented by a member on the Fund's Executive Board and
numerous staff members. The ratio of board members from each country is based on the
country's global financial position, so that the most powerful countries in the global economy
have the heaviest representation. The United States has the highest voting power, followed by
Asian countries such as Japan and China and Western European countries such as Britain,
Germany, France, and Italy.

While the IMF sets standards for the global economy and monitors the financial
communications between countries, it also helps those countries in need by lending them the
money necessary to turn their economy around and rebuild their financial structure. Countries
contribute to a pool from which countries in need can borrow as a short-term loan. The IMF
also assists countries in developing sustainable financial policies, provides economic advice,
helps countries maximize their financial effectiveness, and works to help developing countries
stabilize and sustain themselves in the global economy.

The IMFs fundamental mission is to ensure the stability of the international monetary 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.

Surveillance
The IMF oversees the international monetary system and monitors the economic and financial
policies of its 189 member countries. As part of this process, which takes place both at the
global level and in individual countries, the IMF highlights possible risks to stability and advises
on needed policy adjustments.

It provides the World Economic Outlook, the Global Financial Stability Report, and the
Fiscal each year. It also delves into regional and country-specific assessments. It uses this
information to determine which countries need to improve their policies. The IMF can identify
which ones threaten global stability. The member countries have agreed to listen to the IMF's
recommendations.
Lending
A core responsibility of the IMF is to provide loans to member countries experiencing actual or
potential balance of payments problems. This financial assistance enables countries to rebuild
their international reserves, stabilize their currencies, continue paying for imports, and restore
conditions for strong economic growth, while undertaking policies to correct underlying
problems. Unlike development banks, the IMF does not lend for specific projects.

Capacity Development
IMF capacity developmenttechnical assistance and traininghelps member countries design
and implement economic policies that foster stability and growth by strengthening their
institutional capacity and skills. The IMF seeks to build on synergies between technical
assistance and training to maximize their effectiveness.

ORGANIZATION AND FINANCE

The IMF has a management team and 17 departments that carry out its country, policy,
analytical, and technical work. One department is charged with managing the IMFs resources.
This section also explains where the IMF gets its resources and how they are used.

Management
The IMF has a Managing Director, who is head of the staff and Chairperson of the Executive
Board. The Managing Director is appointed by the Executive Board for a renewable term of five
years and is assisted by a First Deputy Managing Director and three Deputy Managing Directors.

Staff
The IMFs employees come from all over the world; they are responsible to the IMF and not to
the authorities of the countries of which they are citizens. The IMF staff is organized mainly into
area; functional; and information, liaison, and support responsibilities.

IMF resources
Most resources for IMF loans are provided by member countries, primarily through their
payment of quotas.
Quotas
Quota subscriptions are a central component of the IMFs financial resources. Each member
country of the IMF is assigned a quota, based broadly on its relative position in the world
economy.

Special Drawing Rights (SDR)

The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member
countries official reserves.

Gold
Gold remains an important asset in the reserve holdings of several countries, and the IMF is still
one of the worlds largest official holders of gold.

Borrowing arrangements
While quota subscriptions of member countries are the IMF's main source of financing, the
Fund can supplement its quota resources through borrowing if it believes that they might fall
short of members' needs.
 What exactly does I.M.F. do?

Public Finances
Advise governments on how to raise revenues and effectively manage expenditure, including
tax and customs policies, budget formulation, domestic and foreign debt, and social safety nets.
This enables governments to provide better public services such as schools, roads and hospitals.

For instance: Liberia reached out to the IMF to help establish a modern tax structure to raise
revenues and finance essential public services. The IMF helped strengthen Liberias audit and
taxpayer services, and supported the establishment of the Liberia Revenue Authority to better
endure the Ebola crisis in 2014.

The IMFs areas of expertise in fiscal management include:

Tax policy

Tax and customs administration

Expenditure policy

Budget formulation

Public financial management

Fiscal policy and institutional frameworks

Monetary and Financial Systems

Work with central banks to modernize their financial systems such as exchange rate,
inflation and debt policy and their banking supervision. This improves the countrys financial
stability, fueling domestic growth and international trade.

For instance: The IMF assisted the Palestine Monetary Authority in building an automated,
online credit registry system that allows financial institutions to monitor credit more effectively.
Considered among the best in the region, this helped smaller companies and individuals gain
access to credit and reduced non-performing loans.
 The IMFs areas of expertise in monetary policy include:

Monetary and exchange rate policy

Central bank operations

Central bank governance and accounting

Financial supervision and regulation

Systemic risk analysis

Financial crisis management

Debt management

Legislative Frameworks
Help countries align their legal and governance frameworks to international standards so they
can develop sound financial reforms, fight corruption and combat money laundering and
terrorism financing.

For instance: The IMF helped Sudan strengthen its legal and institutional framework to
facilitate its integration into the global financial system. This enabled the Financial Action Task
Force (FATF), in October 2015, to take note of Sudans significant progress and remove the
country from its gray list of monitoring under global AML/CFT compliance process.

The IMFs areas of expertise in the development of legal frameworks include:

Financial institutions and market infrastructures

Central banking and macro prudential oversight

Tax law, fiscal law, and exchange systems

Insolvency and creditor rights

Anti-money-laundering/combating the financing of terrorism

 Statistics

Help countries with compilation, management and reporting of their macroeconomic and
financial statistics data. This provides more accurate understanding of their economy
including of economic vulnerabilities and risks and helps formulate more informed policies. It
also sends a message of transparency and fosters trust in government policies, thereby
attracting international investors who use such statistics to gauge macroeconomic stability.

For instance: Adopting a regional, peer-learning approach, the IMF worked with 12 countries
across Africa to compile and report on their Financial. Reliable data ensured countries became
aware of their economic vulnerabilities, and sent a message of transparency, fostering trust in
government policies.

The IMFs areas of expertise in statistics include:

Multisector statistical issues

National accounts and price statistics

Government finance statistics

Balance of payments, external debt, foreign direct investment, and international investment position

Monetary and financial statistics and financial soundness indicators

Data dissemination standards

 Macroeconomic Frameworks
Train government officials so they improve their ability to analyze economic developments;
develop diagnostic, forecasting and modeling tools; and formulate and implement sound
macroeconomic and financial policies. This helps deepen the dialogue with countries on policy
and programmatic issues and facilitates sharing of policy experiences through peer-to-peer
learning.

For instance: The Financial Programming and Policies (FPP) course covers the principal features
of the main macroeconomic sectors of the economy and the linkages between them, and
teaches participants how to diagnose macroeconomic imbalances and design adjustment
policies. Since the online launch of the FPP course in 2013, more than 3,100 government
officials have completed the training in English, French, Russian and Spanish.

In 2017, the IMF revamped its external curriculum to better integrate with member needs and
the IMFs core work. The new program is linked to well-defined learning objectives and hands-
on policy analysis, and provides greater emphasis on lessons learned from global crises and
economic developments (e.g. linkages and spillovers, global imbalances, and policy
coordination).

Macroeconomic frameworks training provided by the IMF includes courses in the following areas:

Financial Sector Policies

Fiscal Policy

General Macroeconomic Analysis

Monetary, Exchange Rate and Capital Accounts Policies

Special Topics (Inclusive Growth, Vulnerability Diagnostics, etc.)

Macroeconomic Statistics

Safeguard Assessments

Specialized Fiscal Courses

Legal Issues

Country-specific Customized Trainings

VOTING POWER
Voting power in the IMF is based on a quota system. Each member has a number of basic votes (each
member's number of basic votes equals 5.502% of the total votes), plus one additional vote for each Special
Drawing Right (SDR) of 100,000 of a member country's quota. The Special Drawing Right is the unit of
account of the IMF and represents a claim to currency. It is based on a basket of key international currencies.
The basic votes generate a slight bias in favour of small countries, but the additional votes determined by
SDR outweigh this bias. Changes in the voting shares require approval by a supermajority of 85% of voting
power.

In December 2015, the United States Congress adopted a legislation authorizing the 2010 Quota and
Governance Reforms. As a result,

all 188 members' quotas will increase from a total of about SDR 238.5 billion to about SDR 477 billion,
while the quota shares and voting power of the IMF's poorest member countries will be protected.
More than 6 percent of quota shares will shift to dynamic emerging market and developing countries
and also from over-represented to under-represented members.
Four emerging market countries (Brazil, China, India, and Russia) will be among the ten largest members
of the IMF. Other top 10 members are the United States, Japan, Germany, France, the United Kingdom
and Italy

I.M.F. QUOTAS

When a country joins the IMF, it is assigned an initial quota in the same range as
the quotas of existing members of broadly comparable economic size and characteristics. The
IMF uses a quota formula to help assess a members relative position.

The current quota formula is a weighted average of GDP (weight of 50 percent), openness
(30 percent), economic variability (15 percent), and international reserves (5 percent). For this
purpose, GDP is measured through a blend of GDPbased on market exchange rates (weight of
60 percent) and on PPP exchange rates (40percent). The formula also includes a compression
factor that reduces the dispersion in calculated quota shares across members.

Quotas are denominated in Special Drawing Rights (SDRs), the IMFs unit of account. The largest
member of the IMF is the United States, with a current quota (as of March 2017) of SDR82.99
billion (about US$113 billion), and the smallest member is Tuvalu, with a quota of SDR2.5
million (about US$3.4 million).

The conditions for implementing the quota increases agreed under the 14 thGeneral Quota
Review were met on January 26, 2016. As a result, the quotas of each of the IMFs 189
members will increase to a combined SDR477 billion (about US$652 billion) from about
SDR238.5 billion (about US$326 billion). As of March 2017, 179 of the 189 members had made
their quota payments, accounting for over 99 percent of the total quota increases, and total
quotas stood at SDR475 billion (about US$650 billion).

Quotas play several key roles in the IMF

A member's quota determines that countrys financial and organizational relationship with the
IMF, including:

Subscriptions. A member's quota subscription determines the maximum amount of financial

resources the member is obliged to provide to the IMF. A member must pay its subscription in
full upon joining the IMF: up to 25 percent must be paid in SDRs or widely accepted currencies
(such as the US dollar, the euro, the Japanese yen, or the British pound sterling), while the rest
is paid in the member's own currency.

Voting power. The quota largely determines a member's voting power in IMF decisions.
Each IMF members votes are comprised of basic votes plus one additional vote for each
SDR100, 000 of quota. The 2008 reforms fixed the number of basic votes at 5.502 percent of
total votes. The current share of basic votes in total votes represents close to a tripling of their
share prior to the implementation of the 2008 reforms.

Access to financing. The amount of financing a member can obtain from the IMF (its access limit)
is based on its quota. For example, under Stand-By and Extended Arrangements, a member can
borrow up to 145 percent of its quota annually and 435 percent cumulatively. However, access
may be higher in exceptional circumstances.

How quota reviews work

The IMF's Board of Governors conducts general quota reviews at regular intervals (usually every
five years). Any changes in quotas must be approved by an 85 percent majority of the total
voting power, and a members quota cannot be changed without its consent. There are two
main issues addressed in a general quota review: the size of an overall increase and the
distribution of the increase among the members.
First, a general quota review allows the IMF to assess the adequacy of quotas both in terms of
members balance of payments financing needs and in terms of its own ability to help meet
those needs. Second, a general review allows for increases in members quotas to reflect
changes in their relative positions in the world economy. Ad hoc increases outside general
reviews do not occur often, but the increases in quotas for 54 member countries approved
under the 2008 Reform are a recent example.

General Quota Reviews

Overall Quota
Quota Review Resolution Adopted
Increase (percent)

First Quinquennial No increase proposed ---

Second Quinquennial No increase proposed ---

1958/59[1] February and April 1959 60.7

Third Quinquennial No increase proposed ---

Fourth Quinquennial March 1965 30.7

Fifth General February 1970 35.4

Sixth General March 1976 33.6

Seventh General December 1978 50.9

Eighth General March 1983 47.5

Ninth General June 1990 50.0

Tenth General No increase proposed ---

Eleventh General January 1998 45.0

Twelfth General No increase proposed ---

Thirteenth General No increase proposed ---

Fourteenth General December 2010 100.0

2010 Reforms: Doubling of quotas and major realignment of quota shares

 On December 15, 2010, the Board of Governors, the IMFs highest decision-making body,
completed the 14th General Review of Quotas, which involved a package of far-reaching reforms
of the IMFs quotas and governance. This reform package, which became effective on January
26, 2016, delivers an unprecedented 100 percent increase in total quotas and a major
realignment of quota shares. This will better reflect the changing relative weights of the IMFs
member countries in the global economy.

The reform package built on earlier reforms from 2008, which had become effective on
March 3, 2011. The 2008 reforms strengthened the representation of dynamic economies
many of which are emerging market countriesthrough ad hoc quota increases for 54 member
countries. They also enhanced the voice and participation of low-income countries through
a near tripling of basic votes.

Building on the 2008 reforms, the 14th General Review of Quotas:

doubled quotas from approximately SDR238.5 billion to approximately SDR477 billion (about
$653 billion at current exchange rates),

shifted more than 6 percent of quota shares from over-represented to under-represented

member countries,

shifted more than 6 percent of quota shares to dynamic emerging market and developing
countries (EMDCs),

Significantly realigned quota shares. China became the third largest member country in the
IMF, and there are now four EMDCs (Brazil, China, India, and Russia) among the 10 largest
shareholders in the IMF, and

Preserved the quota and voting share of the poorest member countries. This group of countries
was defined as those eligible for the low-income Poverty Reduction and Growth Trust (PRGT)
and whose per capita income fell below $1,135 in 2008 (the threshold set by the International
Development Association) or twice that amount for small countries.

A comprehensive review of the current quota formula was completed in January 2013, when
the Executive Board submitted its report to the Board of Governors. Work on a new quota
formula will continue in the context of the 15th General Review of Quotas.

Next steps

The 15th General Quota Review provides an opportunity to assess the appropriate size and
composition of the IMFs resources and to continue the process of governance reforms. On
December 5, 2016, the Board of Governors adopted a Resolution calling on the Executive Board
to work expeditiously on the 15th Review in line with existing Executive Board understandings
and the guidance provided by the IMFC, and with the aim of completing the 15 th Review by the
2019 Spring Meetings and no later than the 2019 Annual Meetings.
 Special Drawing Right SDR
The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member
countries official reserves. As of March 2016, 204.1 billion SDRs (equivalent to about $285
billion) had been created and allocated to members. SDRs can be exchanged for freely usable
currencies. The value of the SDR is based on a basket of five major currenciesthe US dollar,
the euro, the Chinese renminbi (RMB), the Japanese yen, and the British pound sterling.

The role of the SDR

The SDR was created by the IMF in 1969 as a supplementary international reserve asset, in the
context of the Bretton Woods fixed exchange rate system. A country participating in this system
needed official reservesgovernment or central bank holdings of gold and widely accepted
foreign currenciesthat could be used to purchase its domestic currency in foreign exchange
markets, as required maintaining its exchange rate. But the international supply of two key
reserve assetsgold and the US dollarproved inadequate for supporting the expansion of
world trade and financial flows that was taking place. Therefore, the international community
decided to create a new international reserve asset under the auspices of the IMF.

Only a few years after the creation of the SDR, the Bretton Woods system collapsed and the
major currencies shifted to floating exchange rate regimes. Subsequently, the growth in
international capital markets facilitated borrowing by creditworthy governments and many
countries accumulated significant amounts of international reserves. These developments
lessened the reliance on the SDR as a global reserve asset. However, more recently, the 2009
SDR allocations totaling SDR 182.6 billion played a critical role in providing liquidity to the global
economic system and supplementing member countries official reserves amid the global
financial crisis.

The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the freely
usable currencies of IMF members. Holders of SDRs can obtain these currencies in exchange for
their SDRs in two ways: first, through the arrangement of voluntary exchanges between
members; and second, by the IMF designating members with strong external positions to
purchase SDRs from members with weak external positions. In addition to its role as a
supplementary reserve asset, the SDR serves as the unit of account of the IMF and some other
international organizations.
Basket of currencies determines the value of the SDR

The value of the SDR was initially defined as equivalent to 0.888671 grams of fine goldwhich, at
the time, was also equivalent to one US dollar. After the collapse of the Bretton Woods system in
1973, the SDR was redefined as a basket of currencies. Effective October 1, 2016 the SDR basket
consists of the US dollar, euro, the Chinese renminbi, Japanese yen, and British pound sterling.

The value of the SDR in terms of the US dollar is determined daily and posted on
the IMFs website. It is calculated as the sum of specific amounts of each basket currency
valued in US dollars, based on exchange rates quoted at noon each day in the London market.

The basket composition is reviewed every five years by the Executive Board, or earlier if the IMF
finds changed circumstances warrant an earlier review, to ensure that it reflects the relative
importance of currencies in the worlds trading and financial systems. In the most recent
review (concluded in November 2015), the Executive Board decided that, effective October 1,
2016, the Chinese renminbi is determined to be freely usable (See Article XXX(f)) and was
included in the SDR basket.

A new weighting formula was also adopted in the 2015 review. It assigns equal shares to the
currency issuers exports and a composite financial indicator. The financial indicator comprises,
in equal shares, official reserves denominated in the members (or monetary unions) currency
that are held by other monetary authorities that are not issuers of the relevant currency,
foreign exchange turnover in the currency, and the sum of outstanding international bank
liabilities and international debt securities denominated in the currency.

The respective weights of the US dollar, euro, Chinese renminbi, Japanese yen, and
British pound sterling are 41.73 percent, 30.93 percent, 10.92 percent, 8.33 percent, and
8.09 percent. These weights were used to determine the amounts of each of the five currencies
included in the new SDR valuation basket that took effect on October 1, 2016. These currency
amounts will remain fixed over the five-year SDR valuation period (see daily SDR valuation).
Since currency amounts are fixed, the relative weight of currencies in the SDR basket can
change during a valuation period, with weights rising (falling) for the currencies that appreciate
(depreciate) relative to other currencies over time.

The next review is currently scheduled to take place by September 30, 2021, unless an earlier
review is warranted by developments in the interim.
The SDR interest rate

The SDR interest rate provides the basis for calculating the interest charged to borrowing
members, and the interest paid to members for the use of their resources for regular (non-
concessional) IMF loans. It is also the interest paid to members on their SDR holdings and
charged on their SDR allocation. The SDR interest rate is determined weekly and is based on a
weighted average of representative interest rates on short-term debt instruments in the money
markets of the SDR basket currencies.

SDR allocations to IMF members

Under its Articles of Agreement (Article XV, Section 1, and Article XVIII), the IMF may allocate
SDRs to member countries in proportion to their IMF quotas. Such an allocation provides each
member with a costless, unconditional international reserve asset. The SDR mechanism is self-
financing and levies charges on allocations which are then used to pay interest on SDR holdings.
If a member does not use any of its allocated SDR holdings, the charges are equal to the
interest received. However, if a member's SDR holdings rise above its allocation, it effectively
earns interest on the excess. Conversely, if it holds fewer SDRs than allocated, it pays interest
on the shortfall. The Articles of Agreement also allow for cancellations of SDRs, but this
provision has never been used.

The IMFs Articles of Agreement provide for the possibility to prescribe as other holders of
SDRsthat is, other than IMF memberscertain types of official organizations, such as the BIS,
ECB, and regional development banks. A prescribed holder may acquire and use SDRs in
transactions and operations with other prescribed holders and the IMFs members. The IMF
cannot allocate SDRs to itself or to prescribed holders.

General allocations of SDRs have to be based on a long-term global need to supplement existing
reserve assets. Decisions on general allocations are made for successive basic periods of up to
five years (the last report is from June 2016), although general SDR allocations have been made
only three times. The first allocation was for a total amount of SDR 9.3 billion, distributed in
1970-72, the secondfor SDR 12.1 billiondistributed in 1979-81, and the thirdfor SDR 161.2
billionwas made on August 28, 2009.

Separately, the Fourth Amendment to the Articles of Agreement became effective August
10, 2009 and provided for a special one-time allocation of SDR 21.5 billion. The purpose of the
Fourth Amendment was to enable all members of the IMF to participate in the SDR system on
an equitable basis and rectify the fact that countries that joined the IMF after 1981more than
one fifth of the current IMF membershipnever received an SDR allocation until 2009.

The 2009 general and special SDR allocations together raised total cumulative SDR allocations
to SDR 204.1 billion.

Buying and selling SDRs

IMF members often need to buy SDRs to discharge obligations to the IMF, or they may wish to
sell SDRs in order to adjust the composition of their reserves. The IMF may act as an
intermediary between members and prescribed holders to ensure that SDRs can be exchanged
for freely usable currencies. For more than two decades, the SDR market has functioned
through voluntary trading arrangements. Under these arrangements a number of members and
one prescribed holder have volunteered to buy or sell SDRs within limits defined by their
respective arrangements. Following the 2009 SDR allocations, the number and size of the
voluntary arrangements has been expanded to ensure continued liquidity of the voluntary SDR
market. The number of voluntary SDR trading arrangements now stands at 32, including 19 new
arrangements since the 2009 SDR allocations.
Since September 1987, voluntary transactions have ensured the liquidity of the SDRs. However,
in the event that there is insufficient capacity under the voluntary trading arrangements, the
IMF can activate the designation mechanism. Under this mechanism, members with sufficiently
strong external positions are designated by the IMF to buy SDRs with freely usable currencies
up to certain amounts from members with weak external positions. This arrangement serves as
a backstop to guarantee the liquidity and the reserve asset character of the SDR.
 WORLD BANK
The World Bank is an international financial institution that provides loans to countries of the world
for capital programs. It comprises two institutions: the International Bank for Reconstruction and
Development (IBRD), and the International Development Association (IDA). The World Bank is a component
of the World Bank Group.

The World Bank's stated official goal is the reduction of poverty. However, according to its Articles of
Agreement, all its decisions must be guided by a commitment to the promotion of foreign
investment and international trade and to the facilitation of capital investment.

World Bank Group

He World Bank is different from the World Bank Group, an extended family of five international
organizations:

International Bank for Reconstruction and Development (IBRD)

The International Bank for Reconstruction and Development (IBRD) is an international financial
institution that offers loans to middle-income developing countries.

International Development Association (IDA)

The International Development Association (IDA) is an international financial institution which offers
concessional loans and grants to the world's poorest developing countries.

International Finance Corporation (IFC)

The International Finance Corporation (IFC) is an international financial institution that

offers investment, advisory, and asset-management services to encourage private-sector
development in developing countries.
 Multilateral Investment Guarantee Agency (MIGA)

The Multilateral Investment Guarantee Agency (MIGA) is an international financial institution which
offers political risk insurance and credit enhancement guarantees. Such guarantees help investors
protect investments against political and non-commercial risks in developing countries.

International Centre for Settlement of Investment Disputes (ICSID

The International Centre for Settlement of Investment Disputes (ICSID) is an international

arbitration institution established in 1965 for legal dispute resolution and conciliation between
international investors.
HISTORY
The World Bank was created at the 1944 Bretton Woods Conference, along with three other institutions,
including the International Monetary Fund (IMF). The president of the World Bank is, traditionally, an
American.[6] The World Bank and the IMF are both based in Washington, D.C., and work closely with each
other.

Although many countries were represented at the Bretton Woods Conference, the United States and United
Kingdom were the most powerful in attendance and dominated the negotiations.

Criteria

Eradicate Extreme Poverty and Hunger:

Achieve Universal Primary Education
Promote Gender Equality:
Reduce Child Mortality
Improve Maternal Health
Combat HIV/AIDS, Malaria, and Other Diseases
Ensure Environmental Sustainability
Develop a Global Partnership for Development:
VOTING POWER
In 2010 voting powers at the World Bank were revised to increase the voice of developing countries, notably
China. The countries with most voting power are now the United States (15.85%), Japan
(6.84%), China (4.42%), Germany (4.00%), the United Kingdom (3.75%), France (3.75%), India (2.91%), Russia
(2.77%), Saudi Arabia (2.77%) and Italy (2.64%). Under the changes, known as 'Voice Reform Phase 2',
countries other than China that saw significant gains included South Korea, Turkey, Mexico, Singapore,
Greece, Brazil, India, and Spain. Most developed countries' voting power was reduced, along with a few
developing countries such as Nigeria. The voting powers of the United States, Russia and Saudi Arabia were
unchanged.

The changes were brought about with the goal of making voting more universal in regards to standards, rule-
based with objective indicators, and transparent among other things. Now, developing countries have an
increased voice in the "Pool Model", backed especially by Europe. Additionally, voting power is based on
economic size in addition to International Development Association contributions.
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