Daily Quiz: UPSC Prelims Marathon – February 26, 2019

The International Monetary Fund (IMF) is an organization of 189 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.

The IMF’s fundamental mission is to ensure the stability of the international monetary system. It does so in three ways: keeping track of the global economy and the economies of member countries; lending to countries with balance of payments difficulties; and giving practical help to members.

The IMF oversees the international monetary system and monitors the economic and financial policies of its 189 member countries. As part of this process, which takes place both at the global level and in individual countries, the IMF highlights possible risks to stability and advises on needed policy adjustments.

A core responsibility of the IMF is to provide loans to member countries experiencing actual or potential balance of payments problems. This financial assistance enables countries to rebuild their international reserves, stabilize their currencies, continue paying for imports, and restore conditions for strong economic growth, while undertaking policies to correct underlying problems.

Unlike development banks, the IMF does not lend for specific projects.

The IMF helps its member countries design economic policies and manage their financial affairs more effectively by strengthening their human and institutional capacity through technical assistance and training. The IMF aims to exploit synergies between technical assistance and training—which it calls capacity development—to maximize their effectiveness.

The Asian Development Bank was conceived in the early 1960s as a financial institution that would be Asian in character and foster economic growth and cooperation in one of the poorest regions in the world. Good governance is critical for development. The lack of it hinders the delivery of public services, promotes corruption, and inhibits economic development.

ADB promotes good governance processes and practices for inclusive participatory, and sustainable development in Asia and the Pacific.

The World Bank is an international financial institution that provides loans to developing countries for capital programs. It comprises two institutions: the International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA). The World Bank is a component of the World Bank Group, which is part of the United Nations system.

The World Bank promotes long-term economic development and poverty reduction by providing technical and financial support to help countries reform certain sectors or implement specific projects—such as building schools and health centers, providing water and electricity

The World Bank’s official goal is the reduction of poverty. However, according to its Articles of Agreement, all its decisions must be guided by a commitment to the promotion of foreign investment and international trade and to the facilitation of Capital investment.

Three performance indicators to rank the States:

• average days of employment per household,
• percentage wages paid within the promised 15 days of enlisting to work, and
• the work completion rate.

Each indicator measures the implementation of MGNREGA in the State on an important output. Collectively the three indicators capture the key aspects of MGNREGA implementation- employment generation, wages paid in time, and assets created as promised.

Masala bond is a term is used to refer to rupee-denominated borrowings by Indian entities in overseas markets. The International Finance Corporation (IFC), the investment arm of the World Bank, issued a ₹1,000 crore bond to fund infrastructure projects in India. These bonds were listed on the London Stock Exchange (LSE). IFC then named them Masala bonds to give a local flavour by calling to mind Indian culture and cuisine. While it may seem odd to name a staid debt instrument after food stuffs, it has been done in the past. Chinese bonds, named Dim-sum bonds after a popular dish in Hong Kong, have been around for while. So have Japanese bonds named Samurai after the country’s warrior class.

These are issued to foreign investors and settled in US dollars. Hence the currency risk lies with the investor and not the issuer, unlike external commercial borrowings (ECBs), where Indian companies raise money in foreign currency loans. While ECBs help companies take advantage of the lower interest rates in international markets, the cost of hedging the currency risk can be significant. If unhedged, adverse exchange rate movements can come back to bite the borrower. But in the case of Masala bonds, the cost of borrowing can work out much lower.

This is basic question of simple economics. All are imp reasons for lack of manufacturing base in India.

About New Development Bank

The New Development Bank is a multilateral bank created by BRICS nations viz. Brazil, Russia, India, China and South Africa. It is headquartered in Shanghai, China.

In the NDB, each participant country has been assigned one vote, and none of the countries have veto power. Renowned Indian banker Kundapur Vaman Kamath is the President (first) of NDB.

The BRICS bank will start with an initial paid-in-capital of $50 billion. Each BRICS country will contribute $10 billion. The bank will fund infrastructure projects in developing nations, and will have a $100-billion currency reserve arrangement (CRA) for helping out countries facing short-term liquidity pressures.

India has conveyed the decision to nominate Mr. Kamath for the BRICS bank presidency to other BRICS nations — Brazil, Russia, China and South Africa. Mr. Kamath’s five-year term is to be followed by a Brazilian and then a Russian.

The BRICS had agreed to set up the $100 billion development bank last year, a step that was at the time seen as one that could challenge the dominance of the West in the international financial system. The focus of the international financial system, however, has since then shifted to China’s initiative, the Asian Infrastructure Investment Bank (AIIB).

The BRICS nations had also agreed last year that the New Development Bank, which will fund infrastructure projects in developing nations, would have its headquarters in Shanghai.

Demands for goods, services by the country and stability of government decides the price of any currency in international market as it has its bearing on the soundness of country’s economic system.

Main share price index in famous share market of the world are:

Mumbai – Dolex, Sensex , S & PCNX, Nifty fifty

New York- Dow Jones

Frankfurt (Germany) – midday

Hong-Kong – Hang Seng

Singapore – Simex , Straits Times