International Bank of Reconstruction and Development

Bretton Woods Conference through its members decided in 1994 to establish International Bank of Reconstruction and Development. International Bank for Reconstruction and Development, also known as IBRD is an international finance institution established on 28th December 1946 which was brought under the United Nations through a a specialized agreement on 15th November 1947. This international banking corporation helps member countries of the United Nations with capital for Reconstruction and Development and to maintain balance in international trade. IBRD also performs the function of giving guarantee for foreign loans. This agency employs around 10,000 personnel globally. To be eligible for membership of IBRD, a country has to get majority of the amongst Board of Governors of IBRD.

 

 

IBRD has three main organs which are explained as follows:

1. Board of Governors

This is the body where each member is represented by its representative governor.

 

2. Executive Directors

18 executive directors are elected amongst the Board of Governors that manage and perform the general functions of the bank.

 

3. President

The Executive Directors elect a President who is the head of the organization and presides over meetings of Executive Directors.

IBRD executes its normal business operations independently and not like other specialized agencies of United Nations. IBRD's members are its shareholders who have contributed capital and have a say and right to vote in its decision making process. IBRD borrows funds from international capital markets just like any other bank at a preferred rate because of its AAA credit rating which it has held ever since. Purpose of IBRD is development assistance and poverty reduction.

IBRD is one of the five branches of World Bank Group and is the lending arm of it for middle-income developing countries. IBRD has played a huge role in reconstruction and development around the globe as International Bank of Reconstruction and Development International Development Association have been the two biggest lending associations in the world. The IBRD is governed by the World Bank's Board of Governors which meets once a year and comprises of one governor per member country (most often the country's Finance minister or Treasury secretary). The Board of Governors hands over most of its weight over daily matters such as lending and operations to the Board of Directors. The executive directors collectively represent all 189 member states of the World Bank. The president oversees the IBRD's overall direction and daily operations. 
 

 

IBRD was initially set up post World War II to help European countries stand up on their own feet. They helped European countries initially with projects like dam constrictions, electricity generation, better access to water and sanitation and investment into European industries. Once this goal was achieved, IBRD worked for the same goals around the world. IBRD helps middle income developing countries which is measured by the Gross Domestic Product per Person of a country. Since last three decades, IBRD has reduced its funding towards projects on issues like climate change, poverty eradication etc.

Being a bank, it generates profits as well while it doesn't work for generating profits. The entire surplus earned by IBRD is transferred to IDA (International Development Association).

 

 

The Bank offers an assortment of financial risk management products including foreign exchange swaps, currency conversions, interest rate swaps, interest rate caps and floors, and commodity swaps. To help debtors protect against catastrophes and other special risks, the bank offers a Catastrophe Deferred Drawdown Option to provide financing following a natural disaster or affirmed state of emergency. It also issues catastrophe bonds which transfer catastrophic risks from borrowers to investors. The IBRD accounted $23.2 billion in lending commitments for 100 projects in fiscal year 2019.