Why do we need Multilateral Development Bank?

After the devastating end of World War 2, Multilateral Development Banks (MDB) came to existent. Their main objective was to balance global financial conditions which were very critical due to war’s aftermath. MDBs keep development in priority.

Multilateral Development Bank is a banking system which involves two or more countries. They together contribute in economic growth of partnered nations. This type of initiations helps in lowering the poverty and minimizing financial differences on a global level.

There is no window to increase self profit margins. It is only facilitated for country’s welfare and to fund their internal projects related to energy, education, research and availability of medical reliefs. MDBs contribution is too big in economic growth of the world.

U.S. Treasury notes states that, "At the time when few institutions were lending during the global financial crisis, the MDBs provided $222 billion in financing, which was critical to global stabilization efforts."

MDBs are of two types.

• These are the most recognized and reputed financial institutions which provide grants and loans. Economically weak countries borrow money from wealthier countries at very reasonable interest rates. This type of MDBs provide a very long loan refund time to the borrower country. World Bank is the biggest example of it.
• The second type of multilateral development bank is formed by governments of low-income countries that can then borrow collectively via the MDB in order to secure more favorable rates. The Caribbean Development Bank (CDB) and West African Development Bank (BOAD) are example of this type.

Today MDBs are operating trillions of dollars across the globe. There are many organizations working to advance development. MDBs are now joining forces to strengthen private sector investments in developing countries worldwide. With their joint efforts with International Monetary Fund (IMF), they are doing a very essential job to prevent systemic crisis.

The main focus of Multilateral Development Bank is to support in sustainable growth and development and to combat climate change. Below are the main MDBs right now

• World Bank
• European Investment Bank (EIB)
• Islamic Development Bank (IsDB)
• Asian Development Bank (ADB)
• European Bank for Reconstruction and Development (EBRD)
• CAF - Development Bank of Latin America (CAF)
• Inter-American Development Bank Group (IDB, IADB)
• African Development Bank (AfDB)
• New Development Bank (NDB)

European Investment Bank is the world’s largest Multilateral Development Bank.Source of Article- All bank branch code list

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