World Bank

Examples of World Bank in the following topics:

• The World Bank

  • The World Bank is an international financial institution that provides loans to developing countries for various programs.
  • The World Bank is an international financial institution that provides loans to developing countries for capital programs.
  • The World Bank's official goal is the reduction of poverty.
  • The World Bank differs from the World Bank Group, in that the World Bank comprises only two institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), whereas the former incorporates these two in addition to three more: International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID).
  • Explain the role played by the World Bank in reducing poverty

• Online Direct Banks

  • A direct bank is a bank without any branch network.
  • Direct banks were originally based on providing banking services via telephone.
  • One of the world's first fully functional direct banks was First Direct, which launched in the United Kingdom on October 1, 1989.
  • Upon realizing this, traditional banks began to offer limited online banking services.
  • The initial success of internet banking services provided by traditional banks led to the development of internet-only banks or "virtual banks. " These banks were designed without a traditional banking infrastructure, a cost-saving feature that allowed many of them to offer savings accounts with higher interest rates and loans with lower interest rates than most traditional banks.

• Functions of International Banks

  • Thus, funds move between countries, and investors have access to financial markets that scaleacross the world.
  • Moreover, globalization increased rapidly since World War II and has three causes.
  • International banks link savers and borrowers from different countries across the world, crossing international borders.
  • International banks are concentrated in financial centers across the world, such as New York City, Tokyo, and London, and they operate 24 hours every day,seven days a week.
  • For example, Citibank has branches and subsidiaries in many countries around the world.

• Chapter Questions

  • Appraise the difference between a state bank and a national bank.
  • Identify the two methods the FDIC uses to handle a bank failure.
  • Why did the financial markets in the modern world become international?
  • Identify methods a bank holding company uses to circumvent government regulations.
  • How does a nonbank bank and automated teller machines circumvent bank regulations?

• Regulatory Oversight

  • After World War II, the U.S. dollar became the international transaction currency.
  • The United States and many countries were deregulating, when the 2008 Financial Crisis struck the world economy.
  • Toxic loans became the first loans to sour as the world's economy entered the 2007 Great Recession.
  • The Federal Reserve became the lender of the last resort for the developed world.
  • Effects of the 2008 Financial Crisis still plague the world's economy.

• The Structure and Function of Other Banks

  • The European Central Bank (ECB) is the central bank for the euro and administers the monetary policy of the Eurozone, which consists of 17 EU member states and is one of the largest currency areas in the world.
  • The banks borrow cash, and when the repo notes come due the participating banks bid again.
  • The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based.
  • Established in 1694, it is the second oldest central bank in the world .
  • Summarize the structure of the ECB, the Bank of England, and the People's Bank of China

• Financial Innovation

  • For example, a bank holding company controls one bank, and this bank needs funds.
  • Legally, the bank is no longer a bank and becomes exempted from the extensive U.S. bank regulations.
  • Furthermore, many banks created networks, so customers could access their accounts from any place within the United States and across the world.
  • First, banks can acquire other banks, reducing the number of banks in the United States.
  • Many leaders around the world are debating whether to pass new laws to separate commercial and investment banking in their countries because the 2008 Financial Crisis forced governments to spend billions in bailing out their large banks.

• The United States Banking System

  • However, this law kept small inefficient banks in business, causing the United States to have the largest number of banks in the world.
  • The United States had 14,217 banks in 1986, which fell to 9,459 banks by 2010.
  • Unit banking restricts a bank to a single geographical location, such as in one city, and the bank cannot branch to other cities.
  • Furthermore, branch banking allows a bank to have two or more banking offices owned by a single banking corporation within a geographical area.
  • Financial sector is an extremely important sector of the economy, and every country around the world regulates its financial markets.

• Becoming an International Bank

  • Banks in the United States use four methods to become an international bank, which are:
  • Method 1: The U.S. bank opens a bank branch in a foreign country.
  • U.S. banks open branches in financial centers around the world or places where U.S. firms and corporations engage in business.
  • Bank branches help the bank transfer money across nations' borders.
  • The U.S. bank buys and becomes a majority shareholder of a foreign bank.

• Why the U.S. Government Created Federal Reserve System

  • We explain the structure of the world's two largest and most powerful central banks in this chapter: The Federal Reserve System (Fed) and the European Central Bank (ECB).
  • The United States was a late comer to the world when it created its central bank.
  • They converted a large private bank into a central bank.
  • For example, Great Britain established the Bank of England in 1694, and France founded the Bank of France in 1800.
  • It provides emergency loans to banks and helps restore confidence in the banking system.