BASIC CONCEPTS
Who are considered the owners or shareholders of IFIs?
National governments
In which country was the Bretton Woods conference held?
USA (New Hampshire)
How many years can the loan repayment term be extended to by international financial institutions?
Up to 20–30 years
Which country initiated the establishment of the Paris Club?
France
What does the acronym LIBOR stand for?
London Interbank Offered Rate
On what basis does a Development Financial Institution (DFI) provide risk capital, unlike commercial lenders?
On a non-commercial basis
In what year were the Bretton Woods institutions established?
1944
What are the 2 main disadvantages of IFI loans?
Increase in debt burden and constraints on economic policy
What is the main difference between the Paris Club and the London Club?
Paris Club deals with public debts (to creditor countries); London Club deals with debts to private creditor banks
How many currencies and maturities did LIBOR cover in total?
5 currencies and 7 maturities (35 different LIBOR rates in total)
What was the main reason for the establishment of IFIs?
The search for effective measures to resolve emergency or crisis situations throughout the world
Name the 5 organizations that belong to the World Bank Group.
IBRD, IFC, IDA, ICSID, MIGA
Name the 3 main objectives/directions of IFI lending.
Infrastructure projects, health and education, green energy and environmental sustainability
When was the first meeting of the London Club held and due to which country's debt problems?
In 1976, due to Zaire's debt payment problems
Which rate replaced LIBOR and when did this happen?
SOFR (Secured Overnight Financing Rate), on June 30, 2023
What are the 3 financing instruments that MDBs use to support projects?
Long-term loans at market rates, very-long-term loans below market rates (credits), and grants
What organization was originally included in the Bretton Woods agreement but later became the WTO in 1995?
ITO — International Trade Organisation
How do the IMF and the World Bank differ in terms of lending duration?
IMF provides short-term financial assistance; World Bank provides long-term loans and grants
How many permanent members does the Paris Club have and which major countries are included?
22 permanent members; including the USA, UK, Japan, and most Western European and Scandinavian nations
What caused LIBOR to lose its credibility as a benchmark rate?
Manipulation, scandal, and methodological critique
What are the 5 types of Development Financial Institutions (DFIs)?
Multilateral development banks, national development banks, bilateral development banks, microfinance institutions, community development financial institutions and revolving loan funds
How many Bretton Woods countries participated in the conference and what were the 3 main institutions established?
43 countries; IMF, World Bank (IBRD), and IFC
What specific economic reforms might IFIs require from borrowing countries as a condition for loans?
Economic policy reforms and tax policy liberalization
What does membership in the Paris Club imply and when was it first established?
A constant exchange of information between creditors about the debt and repayment process; established in 1956 when Argentina agreed to meet its creditors in Paris
LIBOR was based on 5 currencies — name all of them.
U.S. dollar, Euro, British pound, Japanese yen, and Swiss franc