Multilateral Development Banks

What is in the News?

• Under the aegis of India’s G20 Presidency, a 11-member expert group has been set up to explore measures to strengthen multilateral development banks (MDBs), the finance ministry said in a statement.
• Professor Lawrence Summers, President Emeritus, Harvard University and N K Singh, former Chairperson of the 15th Finance Commission of India, are co-convenors of the G20 Expert Group.
• The panel would work on making a road map for an updated MDB ecosystem for the 21st century, touching upon all aspects of MDB evolution, and mechanisms for coordination among these banks to address and finance global development.

Multilateral Development Banks (MDBs)

• MDB is a financial institution established by multiple member countries and falls under international law. E.g., International Monetary Fund, World Bank, Asian Development Bank etc.
• One of the critical areas that will be looked at is how can the World Bank contribute towards climate finance, critical for developing and LDCs to make a smooth transition to lower carbon emissions without compromising on growth.
• Significance of MDBs : 
  • Stabilizing the global financial system during the time of crisis; 
  • Providing long-term financing; 
  • Providing lower-cost financing

Issues of MDBs

• Currently, MDBs are dominated by developed Countries (WB by USA, IMF by EU and ADB by Japan); 
• They impose conditionality in loans; 
• There is a lack of Transparency and Accountability.

Practice Questions for Prelims

Which of the given statements about Multilateral Development Bank is/are correct?

1. MDB is a financial institution established by multiple member countries like IMF, World Bank etc.
2. It does not fall under the purview of any international law.

Code:
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2

Ans. a

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