International Economic Organizations
International Economic Organizations are global bodies that help manage the world economy. After World War II, many countries were poor and unstable. Leaders met at Bretton Woods in 1944 to solve this. They created two major groups: the International Monetary Fund (IMF) and the World Bank. These are often called the Bretton Woods Twins. Later, in 1995, the World Trade Organization (WTO) was formed to manage global trade rules.
Concepts (3)
SDR is an international reserve asset created by the IMF. It is not a currency itself. Instead, it is a potential claim on the usable currencies of IMF members.
SDR is an international reserve asset created by the IMF. It is not a currency itself. Instead, it is a potential claim on the usable currencies of IMF members. The value of an SDR is based on a basket of five major currencies: US Dollar, Euro, Chinese Renminbi, Japanese Yen, and British Pound Sterling. Countries use SDRs to supplement their official reserves during economic trouble. For example, India can exchange its SDRs for hard cash like Dollars if needed.
Masala Bonds are bonds issued outside India but settled in Indian Rupees. They are issued by Indian entities or international bodies like the International Finance Corporation (IFC).
Masala Bonds are bonds issued outside India but settled in Indian Rupees. They are issued by Indian entities or international bodies like the International Finance Corporation (IFC). Since they are rupee-denominated, the borrower does not face the risk of currency fluctuations. If the Rupee value falls, the foreign investor bears the loss, not the Indian borrower. These bonds help Indian companies raise money from global markets for infrastructure projects.
Every member of the IMF must contribute a certain amount of money, called a 'quota'. A portion of this quota is kept in a form that the member can withdraw at any time without any fees or conditions.
Every member of the IMF must contribute a certain amount of money, called a 'quota'. A portion of this quota is kept in a form that the member can withdraw at any time without any fees or conditions. This portion is called the 'Gold Tranche' or 'Reserve Tranche'. It is basically a country's own money stored with the IMF. It acts as an emergency fund that the country can use before taking a formal loan.
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Start Lesson: Special Drawing Rights (SDR)