Regional Organizations Dersi 7. Ünite Sorularla Öğrenelim

In the strictest sense, what does financial intermediation mean?

In the strictest sense, financial intermediation means the process of taking in funds from depositors and then lending them out to borrowers.

How many economic tasks do financial institutions perform?

Financial institutions mainly perform two important economic tasks:

To manage the fund generation and payment mechanisms and

to bring investors and savers closer with fund owners and borrowers.

According to Fry and Aghevli, what are the key indicators of monetization and financial intermediation?

According to Fry and Aghevli, number of banks and bank branches per capita are key indicators of monetization and financial intermediation.

In developing countries, what was the main purpose of the pre-1980s financial policies, (especially in the 1960s and the 70s) ? 

In developing countries, the main purpose of the pre-1980s financial policies, (especially in the 1960s and the 70s) was to boost industry and development by providing low-cost financing.

After the 1980s, the abovementioned interventionist policies were harshly criticized due to the fact that they had led to deep economic crises and to the spread of global integration in developing countries. What conclusion did these  discussions finally lead to? 

These discussions finally led to the conclusion that financial liberalization would be an effective mean for the reestablishment of growth and stability.

When were the the core principles for effective banking supervision last revised by the Committee?

The core principles for effective banking supervision were last revised by the Committee in September 2012.

How are the revised Core Principles categorised?

The revised Core Principles define 29 principles that are broadly categorised into two groups:

the first group (1 to 13) focus on powers, responsibilities and functions of supervisors,

while the second group (14 to 29 )focus on prudential regulations and requirements for banks.

What are the regional development banks (RDBs)?

The regional development banks (RDBs) are multilateral financial institutions that provide financial and technical assistance for development in low- and middle-income countries within their regions.

What does RDB usually refer to?

RDB usually refers to four institutions:

African Development Bank (AfDB),

Asian Development Bank
(ADB),

European Bank for Reconstruction and Development (EBRD) and

Inter-American Development
Bank (IDB).

What are two problems that are leading to a redesign of international financial architecture where the RDBs are playing new roles (Hinds, 2002)?

Prolonged instability of developing countries and the volatility of their access to the global financial markets stand out as two main problems that are leading to a redesign of international financial architecture where the RDBs are playing new roles (Hinds, 2002).

What are the main objectives of the RDBs?

The main objectives of the RDBs are as follows:

Helping member countries to develop their domestic financial markets so that they can mobilize their own savings for development purposes;

Bringing member countries to global financial markets in a sustainable manner;

And making... less severe, with their insufficient resources, the pro-cyclical behaviour of private sources of financing.

Instruments and policies for a successful integration of public sector into global markets: In relation to this subject,what are there the issues that need to be addressed?

Instruments and policies for a successful integration of public sector into global markets: In relation to this subject, there are two issues that need to be addressed: to improve access to financial markets and
survive financial crises.

In order to help countries get sufficient financial resources for their needs, lending policies should be designed under two main objectives.What are they?

In order to help countries get sufficient financial resources for their needs lending policies should be designed under two main objectives: improving domestic financial markets of member countries and integrating them into the global markets,

What are the four issues integrating developing countries into the international financial architecture requires coping with?

Integrating developing countries into the international financial architecture requires coping with four issues:

First issue: developing countries have to perform a number of tasks in order to stabilize their economies

Second issue: executing the second generation
reforms to provide an institutional setting suitable for a modern economy,

Third issue: countries where the above-mentioned tasks have already been achieved or advanced to a large extent will need to defeat the resistance of markets in financing developing countries on a continual basis;

Fourth issue: despite the fact that carrying out the above-mentioned tasks would considerably reduce the risk of financial crisis, it may not help eliminate it completely.

Can the RDBs offer value-added activities to the new financial architecture in addition to activities that are already being provided by the World Bank?  

RDBs are in a position to offer different and unique value-added activities to the new financial architecture. The comparative advantage of the World Bank is that it can shift knowledge and experience across regions.

Should the tasks regarding global financial architecture be formally divided between the World Bank and the RDBs?

 It would not be quite advantageous for developing countries to assign tasks in an orderly fashion to these two institutions as a task overlap between them would be inevitable. Given the fact that regional and global problems are inseparably interlinked, the comparative advantages of both institutions are required. 

What does ''The MDBs'' mean?

It means ''multilateral development banks''

Why were they established?

They were established to address a market failure in long-term cash flow to Europe devastated by the conflict and developing countries and they have been integrating financial capacity and technical knowledge for decades to support the
investments of borrowing members during post conflict restructuring, growth incentive, and poverty reduction.

When and where did the World Bank respond to an immediate need to rebuild European countries devastated by the World War II?

Conceived in 1944 at the Bretton Woods Monetary Conference in Bretton Woods, the World Bank responded to an immediate need to rebuild European countries devastated by the World War II.

The world is now entering an era that seems quite different from the one where the legacy MDBs were at the peak of their influence. In line with this statement, two things have changed.What are they?

a) The fast economic growth of China and other emerging markets in the last 30 years has changed drastically the geo-economic scene.

b) Today, most of the developing countries have domestic or international access to consultancy services, policy ideas, and useful examples of good practice that seemed to be monopolized by the MDBs during the late 20th century.