Finance Banking

World Bank And Banking Laws

Published at 01/07/2012 13:15:25



Created in 1944 in order to rebuild Europe after the devastating effects of the Second World War, the World Bank Group, or WBG, was established under the International Bank Reconstruction and Development, or IBRD. Presently, the World Bank provides its services as an international organization, fighting against poverty and offering assistance to middle and low income countries. It gives advice and training to both private and public sectors, helping others help themselves. The World Bank is composed of more separated institutions that run under the World Bank Group. The bank banking services offered are regarded as the best choice for countries that cannot afford to borrow money from private banks.




Having already almost 200 member countries, its joining policy requires a country to join the IMF, or the International Monetary Fund. The number and size of the shareholders depend strictly on the countries’ economy. In order to access the bank banking services, a country must pay a subscription fee, nearly 90% of the quota of the necessary payment to the International Monetary Fund. Also, the country must acquire between 190 and 200 World Bank shares, which cost about 120.635 dollars each, after the increase of capital in 1988. Only 0.6% of these shares need to be paid in United States dollars, in cash, and 5.40% in the country’s local currency. If needed, the World Bank can ask for the rest of the shares in monetary value. Also, countries can choose to opt for another 250 shares, which do not require immediate payment, as they become “callable capital”.   




The president of the World Bank is always elected from the biggest shareholder, United States of America in this case, the rest of the members being represented by governors. Also, each year, a delegation of 24 executive directors, or ED, is commissioned. The top shareholders - the United States, the United Kingdom, France, Germany and Japan - are allowed to have an individual executive director, while the rest of the countries are represented together in a small group by the other 19 executive directors. China, Russia and Saudi Arabia have decided to be single constituencies, as their economies are influential and should not be represented in a multi-country group.


The developing countries, through the world bank banking services, use new improved methods to function, changing their policies accordingly. And, as a result, as the time passes, every country will require a larger sum of money to meet certain criteria. However, sometimes the countries accumulate too much debt and that can hold the development process in place, or, worse than that, reversing it. There exist a scheme for such scenario, the Heavily Indebted Poor Countries scheme, and it diminishes the payments that these countries must make to the World Bank and its shareholders.


Tips and comments


In conclusion, there is no surprise in the fact that some are skeptical when it comes to how the aid is given. There are certain interests in how the world bank banking services are managed between the countries.



Most Recent Articles

  • Greek Banks And Banking Law
    A bank is a financial institution which accepts sums of money as deposits and uses that sum to lend it to people, either through capital markets or directly. It basically connects customers ...