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Unit 9: International Financial Institutions-I

The financial environment comprises all public sector institutions, official organizations, notes
monetary, financial, fiscal and legal authorities involved directly or indirectly with finance issues
and that have a direct impact on the availability and cost of trade finance. Special incentive
schemes, training institutes for bankers, auditing firms and all the providers of services that
support trade finance, are part of this environment.
Usually, requests for technical assistance at this level are formulated by local authorities concerned
with international trade expansion and sometimes by regional banks. In many instances they are
part of an integrated effort supported by several donors and UNDP.
Activities at this level can be simply of an advisory nature or more involved such as implementing
measures or schemes identified in partnership with local institutions and authorities. Examples
of diagnostic tools developed by ITC at the financial environment level are country “snapshots”
that will soon lead to complete Trade Finance Maps which are currently being developed and
tested.
During the period of World War II (1939-1945), it was realized that the economic development
of all the countries of the world was the only solution to attain stable peace and prosperity in
the world. It was felt by the developed nations that poverty anywhere is a threat to prosperity
everywhere. As a result in the year 1944, a conference was held at Bretton Woods in USA
which was attended by the representatives of 44 countries including India. It was decided in
the conference of Bretton Woods to set up two financial institutions for the development of all
countries of the world. These two institutions were:
1. International Monetary Fund (IMF); and

2. International Bank for Reconstruction and Development (IBRD) popularly known as World
Bank.
The logic behind setting up IMF was to stabilize exchange rates by facilitating the removal of
temporary balance of payments deficits. The objective of IBRD or World Bank was to reconstruct
the war-ravaged economies and provide them the capital necessary for the economic development
of underdeveloped countries. A detailed description of these institutions is given in this unit.
For the promotion of world trade, an agreement related to tariffs on trade was signed by a few
countries of the world on October 30, 1947; this agreement was known as GATT which was
replaced by World Trade Organization (WTO), in 1995.

Did u know? IMF was setup to stabilise exchange rates and IBRD was setup to provide aid
to economically weaker countries.

9.1 international financial institutions and liquidity

The Financial Institutions Practice Group represents domestic and foreign financial institutions,
their holding companies and affiliates and major non-bank financial companies encompassing
the entire scope of permissible bank and non-bank activities. Such activities have included
bank and commercial lending, secured and unsecured lending; asset based lending, leasing,
project finance, structured finance, asset securitization, debt and equity securities offerings, trust
services and regulatory counseling and representation before federal and state agencies. We also
represent non-financial corporate clients in all of their lending and borrowing requirements,
including unsecured and asset based lending, leasing and securitized transactions.

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