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International financial institutions (IFI) are organizations that were created by national governments from different nations. The World Bank, the International Monetary Fund (IMF), and African Development Bank (AfDB) are all international financial institutions. Some institutions, such as the World Bank, provide lending services to nations around the world, and others focus on working with governments and humanitarian organizations within one particular area. International financial institutions attempt to foster economic development and improve economic relations between nations.
The World Bank was founded in 1944 with the intention of reducing poverty around the world. In the aftermath of World War II, the World Bank, with funding from nations including the United States and the United Kingdom, began to write loans to war ravaged nations. Since its inception, the World Bank has shifted its attention to tackling poverty by providing loans to developing nations. The United States is the primary international power behind the bank and nominates the president of the bank, who has always been a United States citizen since the organization's inception.
One of the best known international financial institutions is the IMF. It was also founded in 1944, and its original purpose was to establish an international monetary exchange rate system. Some nations are not part of the IMF, and its policies and directives only have a direct impact on member nations. The IMF attempts to stabilize global financial markets by encouraging member nations to work closely together and to implement laws that encourage economic development and international trade. IMF member nations can borrow money from the fund, and during recessionary periods some nations heavily rely on these loans to combat the danger of economic collapse.
The AfDB is an organization that was founded in 1964 in order to facilitate the economic development of African nations. National governments can obtain low cost loans from the AfDB to finance projects such as the implementation of new communication systems, improved sanitation, and roads. Although it was founded as an African entity, the bank now allows non-African nations to join. The United States, China, and Japan are among the non-African member states that have a role in the AfDB.
Among the most politically powerful international financial institutions is the European Investment Bank (EIB). The EIB was created by members of the European Union (EU) in 1958. Member nations can obtain loans from the EIB, but its primary objective is to provide economic support for the EU's political objectives. Within Europe the bank primarily focuses on fostering cohesion between member nations, but outside Europe the bank helps to encourage economic reform and energy conservation.