Global financial system

Global financial system (GFS)

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The global financial system (GFS) is a financial system consisting of institutions and regulators that act on the international level, as opposed to those that act on a national or regional level. The main players are the global institutions, such as International Monetary Fund and Bank for International Settlements, national agencies and government departments, e.g., central banks and finance ministries, and private institutions acting on the global scale, e.g., banks and hedge funds.

International institutions
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The most prominent international institutions are the IMF, the World Bank and the WTO: The International Monetary Fund keeps account of international balance of payments accounts of member states. The IMF acts as a lender of last resort for members in financial distress, e.g., currency crisis, problems meeting balance of payment when in deficit and debt default. Membership is based on quotas, or the amount of money a country provides to the fund relative to the size of its role in the international trading system. The World Bank aims to provide funding, take up credit risk or offer favourable terms to development projects mostly in developing countries that couldn't be obtained by the private sector. The other multilateral development banks and other international financial institutions also play specific regional or functional roles. The World Trade Organization settles trade disputes and negotiates international trade agreements in its rounds of talks

IMF
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The International Monetary Fund (IMF) is an organization of 186 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.

What does IMF do?

The IMF supports its membership by providing ` policy advice to governments and central banks based on analysis of economic trends and cross-country experiences; ` research, statistics, forecasts, and analysis based on tracking of global, regional, and individual economies and markets; ` loans to help countries overcome economic difficulties; ` concessional loans to help fight poverty in developing countries; and ` technical assistance and training to help countries improve the management of their economies.

More specifically, the IMF continues to ` provide a forum for cooperation on international monetary problems ` facilitate the growth of international trade, thus promoting job creation, economic growth, and poverty reduction; ` promote exchange rate stability and an open system of international payments; and ` lend countries foreign exchange when needed, on a temporary basis and under adequate safeguards, to help them address balance of payments problems.

IMF MEMBERSHIP
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The IMF currently has a near-global membership of 186 countries. To become a member, a country must apply and then be accepted by a majority of the existing members. In June 2009, the former Yugoslav republic of Kosovo joined the IMF, becoming the institution's 186th member.

Where does the IMF get its money?

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The IMF's resources come mainly from the quotas that countries deposit when they join the IMF. Quotas broadly reflect the size of each member's economy: the larger a country's economy in terms of output, and the larger and more variable its trade, the larger its quota tends to be. For example, the United States, the world's largest economy, has the largest quota in the IMF. Quotas are reviewed periodically and can be increased when deemed necessary by the Board of Governors.

Countries deposit 25 percent of their quota subscriptions in Special Drawing Rights or major currencies, such as U.S. dollars or Japanese yen. The IMF can call on the remainder, payable in the member's own currency, to be made available for lending as needed. ` The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves. Its value is based on a basket of four key international currencies(the euro, Japanese yen, pound sterling, and U.S. dollar) SDRs can be exchanged for freely usable currencies.
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The IMF and the World Bank are different, but complement each other's work. Whereas the IMF's focus is chiefly on macroeconomic and financial sector issues, the World Bank is concerned mainly with longer-term development and poverty reduction. Its loans finance infrastructure projects, the reform of particular sectors of the economy, and broader structural reforms. Countries must join the IMF to be eligible for World Bank membership.

The IMF collaborates with the World Trade Organization (WTO) both formally and informally. The IMF has observer status at WTO meetings and IMF staff contribute to the work of the WTO Working Group on Trade, Debt, and Finance. And the IMF is involved in the WTO-led Integrated Framework for Trade-Related Technical Assistance to Least Developed Countries,

Bank for International Settlements

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The Bank for International Settlements (BIS) is an international organisation which fosters international monetary and financial cooperation and serves as a bank for central banks.

The BIS fulfils this mandate by acting as: ` a forum to promote discussion and policy analysis among central banks and within the international financial community ` a centre for economic and monetary research ` a prime counterparty for central banks in their financial transactions ` agent or trustee in connection with international financial operations ` The head office is in Basel, Switzerland and there are two representative offices: in the Hong Kong Special Administrative Region of the People's Republic of China and in Mexico City. ` Established on 17 May 1930, the BIS is the world's oldest international financial organisation. ` As its customers are central banks and international organisations, the BIS does not accept deposits from, or provide financial services to, private individuals or corporate entities. The BIS strongly advises caution against fraudulent schemes.

General Meetings
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The BIS currently has 56 member central banks, all of which are entitled to be represented and vote in the General Meetings.Voting power is proportionate to the number of BIS shares issued in the country of each member represented at the meeting. At the Annual General Meeting, key decisions by member central banks focus on distribution of the dividend and profit, approval of the annual report and the accounts of the Bank, adjustments in the allowances paid to Board members, and selection of the Bank's external auditors. The Annual General Meeting is held in late June/early July. Extraordinary General Meetings must be called in order to amend the Statutes of the Bank, change its equity capital or liquidate the Bank.

Member central banks

Members are the central banks or monetary authorities of: ` Algeria, Argentina, Australia, Austria, Belgium, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, Chile, China, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong SAR, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Macedonia (FYR), Malaysia, Mexico, the Netherlands, New Zealand, Norway, the Philippines, Poland, Portugal, Romania, Russia, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, the United Kingdom and the United States, plus the European Central Bank.

BIS activities
A meeting place for central banks ` Currently more than 5,000 senior executives and officials from central banks and supervisory agencies participate in meetings organised by the BIS every year. ` The most important meetings held at the BIS are the regular meetings of Governors and senior officials of member central banks. Held every two months in Basel, these gatherings provide an opportunity for participants to discuss the world economy and financial markets, and to exchange views on topical issues of central bank interest or concern. The main result of these meetings is an improved understanding by participants of the developments, challenges and policies affecting various countries or markets. An atmosphere of openness, frankness and informality amongst participants is critical to the success of BIS meetings.

World Bank
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The World Bank is a vital source of financial and technical assistance to developing countries around the world. their mission is to fight poverty with passion and professionalism for lasting results and to help people help themselves and their environment by providing resources, sharing knowledge, building capacity and forging partnerships in the public and private sectors.

They are not a bank in the common sense; they are made up of two unique development institutions owned by 186 member countries: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). Each institution plays a different but collaborative role in advancing the vision of inclusive and sustainable globalization. The IBRD aims to reduce poverty in middleincome and creditworthy poorer countries, while IDA focuses on the world's poorest countries.

Together, they provide low-interest loans, interest-free credits and grants to developing countries for a wide array of purposes that include investments in education, health, public administration, infrastructure, financial and private sector development, agriculture, and environmental and natural resource management The World Bank, established in 1944, is headquartered in Washington, D.C. Have more than 10,000 employees in more than 100 offices worldwide. Latest: Bank to Mobilize $100 Million for Haiti

WTO
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The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the worlds trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.

Location: Geneva, Switzerland Established: 1 January 1995 Created by: Uruguay Round negotiations (1986-94) Membership: 153 countries on 23 July 2008 Functions: Administering WTO trade agreements Forum for trade negotiations Handling trade disputes Monitoring national trade policies Technical assistance and training for developing countries Cooperation with other international organizations

UNCTAD
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The United Nations Conference on Trade and Development (UNCTAD) was established in 1964 as a permanent intergovernmental body. It is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues. The organization's goals are to "maximize the trade, investment and development opportunities of developing countries and assist them in their efforts to integrate into the world economy on an equitable basis." (from official website).The creation of the conference was based on concerns of developing countries over the international market, multi-national corporations, and great disparity between developed nations and developing nations.