Functions of International Financial Institutions (IFIs)

Courses : Intermediate Macroeconomics Lecturer : Frischa Adellia Semester : 4th Semester, 2022/2023 Sesion Functions of International Financial Institutions (IFIs) International Financial Institutions (IFIs) are organizations that aim to facilitate international financial cooperation and assist countries in solving global financial problems. The main functions of IIFS are as follows: 1. Assisting countries in overcoming global financial problems: IFIs assist countries in overcoming global financial problems, such as financial crises, liquidity crises, and foreign debt problems. IFIs also provide technical advice and support to assist countries in designing appropriate financial policies. 2. Providing loans and financial assistance: IFIs provide loans and financial assistance to countries in need to help meet their financial needs. These loans can be used to finance development projects, improve infrastructure, or help countries overcome larger financial problems. 3. Enhancing global financial market stability: IIFS work to enhance global financial market stability by promoting balanced and sustainable financial policies around the world. IIFS also monitor global financial market developments to help prevent a larger financial crisis. 4. Provide technical support and training: IFIs provide technical support and training to countries in financial management, financial regulation and financial supervision. This helps countries improve their financial governance and build capacity to manage complex financial issues. 5. Being a forum for international financial discussion and cooperation: IFIs are a forum for international financial discussion and cooperation, where countries can share experiences and information, and work together to address global financial issues. This helps create a more balanced and sustainable financial environment around the world. 6. Providing analysis and research: IFIs provide analysis and research on global financial issues to assist countries in making sound financial decisions. This analysis and research covers various aspects of finance, such as financial market stability, economic growth, risk management, and financial policy. 7. Regulating international financial standards and practices: IIFS have a role in regulating international financial standards and practices, such as accounting standards, financial reporting standards and financial regulations. This helps create a more transparent and trustworthy financial environment around the world. 8. Providing special assistance in emergency situations: IFIs also provide special assistance in emergency situations, such as humanitarian assistance in cases of natural disasters or conflict. This assistance can be in the form of emergency loans or other financial assistance to assist countries in coping with these emergency situations. In carrying out these functions, IFIs cooperate with member countries and other international organizations, such as the World Bank, the International Monetary Fund (IMF), and the United Nations (UN). IFIs themselves have several institutions that are part of their system, such as the International Development Bank, the International Bank for Reconstruction and Development, and the International Finance Corporation. This financial institution provides services as an intermediary between capital owners and the debt market which is responsible for channeling funds from investors to companies that need these funds. The presence of these financial institutions facilitates the flow of money in the economy, where money from individual investors is collected in the form of savings so that the risk of investors shifts to financial institutions which then channel these funds in the form of debt loans to those in need. Purpose of International Financial Institutions a. Assisting Asian countries in particular in coordinating their policies and development plans with the aim of, among other things: rejuvenating the economy and increasing the expansion of foreign trade. b. Utilizing available resources with priority to develop Asian countries, especially those that are still underdeveloped. c. Provide technical assistance to prepare, finance and implement various development programs/projects including formulating project proposals d. Carry out various service activities according to the objectives of the Asian Development Bank The most well-known and influential International Financial Institutions are the International Monetary Fund (IMF) and the World Bank. The IMF aims to promote international monetary cooperation and ensure the stability of the global financial system. The IMF also provides loans to countries experiencing financial problems and provides advice on economic policies. The World Bank aims to reduce poverty and promote economic growth in developing countries through development programs and financial support. Apart from the IMF and the World Bank, there are also several other international financial institutions that have different roles and functions, such as the European Central Bank, the Asian Development Bank and the African Development Bank. Each of these international financial institutions has a different focus and objectives according to the region and the needs of the member countries. Criticism of the International Financial Institutions is mainly related to their actions which are considered to be imposing neoliberal policies and exacerbating economic disparities in developing countries. Criticism is also related to the influence of developed countries which are too dominant in decision making and policies in these international financial institutions.