2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
Over the long history of the existence of credit institutions, they have undergone changes more than once. International financial organizations are created on the basis of multilateral international agreements and are designed to promote the development of the economies of the participating countries, simplify financial settlements between them, and maintain a stable state of national currencies.
Among the most significant international institutions are the Bank for Reconstruction and Development, the World Bank, the Bank for International Settlements and the International Bank for Economic Cooperation (IBEC), which will be discussed in the article.
Definition
IBEC is an international financial institution established by the socialist member countries. It was created in 1963 on the basis of the Agreement on Multilateral Settlements and the organization of IBEC. The founders of the bank were: the USSR, Bulgaria, Poland, Hungary, the GDR, Romania, Mongolia, Czechoslovakia. Cuba and Vietnam later joined the Agreement. The headquarters is located in Moscow. IBEC is an economically open institution. Any country that shares the beliefs and interests of the Bank and is ready to assume the obligations established by the Agreement can join it.
The authorized capital of the Bank for Economic Cooperation amounted to just over 300 million transferable rubles. The share that each member contributes is determined based on the level of GDP of the member country.
Now the authorized capital of the Bank is estimated at more than 400 million euros.
Bank Functions
The Bank was created with the aim of expanding cooperation in the field of economy, developing the national economies of members and strengthening trade ties.
The International Bank for Economic Cooperation produces the following functions:
- Performing international transfers in transferable rubles.
- Crediting of external trading operations between participants.
- Attraction and storage of transferable rubles.
- Opening gold deposits, the process of buying and selling gold.
- Issue cash guarantees to participating countries.
- Financing of large enterprises located in the countries of the Bank.
The International Bank for Economic Cooperation is an intermediary betweenparticipating countries. It is designed to ensure the timely and full fulfillment of obligations by countries to each other.
Member States
The Bank currently has the following member countries: Republic of Bulgaria, Republic of Poland, Russian Federation, Romania, Czech Republic, Socialist Republic of Vietnam, Mongolia, Slovak Republic.
In all these countries the Moscow Bank for Economic Cooperation has a wide network of correspondent banks. It has been assigned an international legal entity identification code. Due to the fact that the Bank includes the countries of the European Union, the Bank is not subject to inclusion in the sanctions list. This decision was made at the Council of the EU.
Bodies of the Board of the Bank
The Bank is managed by two administrative structures: the Board of the Bank and the Council of the Bank.
The Council is the highest body. He manages the Bank, establishes the main directions of activity and development of the International Economic Bank, approves investment, credit and other plans, gives orders to the Board of the Bank, elects the bodies of the Board, and executes other monetary orders of the member countries.
The Board is the executive body of the Bank. Within the limits of its authority, this body is directly involved in the management. The functions of the Management Board are specified in the Charter of the Bank. The composition of the Board is represented by the chairman and members. Members can be citizens of any state participating in the activities of the bank. Members appointed by the CouncilBank by prior agreement. Moreover, each country, regardless of the contribution to the authorized capital of the organization, has the same number of votes when choosing members of the Council of the Bank.
Decisions are made in the Council of the Bank by voting. In order for a decision on any issue to be made, 100% of the votes “for” are required.
Loans and deposits
The main function of the International Bank for Economic Cooperation is lending to member countries. Previously, the Bank provided 6 types of loans. At the moment, there are 2 most popular forms of lending left: a settlement loan and an urgent one.
Settlement credit is issued in the amount of no more than 2 percent of the money turnover of the participating country with other countries over the past year. It is issued in cases where the amount of the country's payments exceeds the amount of receipts. Such a loan is repaid automatically as funds are received into the account of the debtor country. This type of lending accounts for more than 80 percent of the total number of loans issued by the International Bank for Economic Cooperation.
The second type is a term loan issued for up to a year. It is issued to equalize the trade balance, increase trade, seasonal needs, and so on. It has preferential interest rates. The size of interest rates on loans and the terms of repayment are determined by the Council of the Bank. The amount of the loan is not affected by the size of the country's contribution to the authorized capital. Loans are issued from borrowed and own funds of the Bank.
Bet sizeon deposits also determines the Board, depending on the profitability. So, the interest rate on an annual deposit is approximately 4 percent, with a half-year deposit, the rate will be about 2-2.5 percent.
Bank Currency
As a result of the Agreement adopted in 1963, all settlements within the International Bank for Economic Cooperation between the participating countries were made in transferable rubles. In accordance with the new agreement, the authorized capital of the Bank and settlements are made in euros.
The Bank converts national currencies into euros and carries out mutual settlements between countries. All settlements of the participants are made in a single currency on behalf of the national banks of the countries in the amount of their funds.
Collection with instant payment is the main advantage of payments in foreign currency over other forms. In order to transfer money, it is enough to make a payment order - and the Bank will provide a quick transfer.
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