Over the long history of the existence of credit institutions, they have repeatedly undergone changes. International financial organizations are established on the basis of multilateral international agreements and are called upon 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 are: USSR, Bulgaria, Poland, Hungary, East Germany, Romania, Mongolia, Czechoslovakia. Later, Cuba and Vietnam joined the Agreement. The headquarters is located in Moscow. IBEC is an economically open institution. Any countries that share the convictions and interests of the Bank and are ready to assume the obligations established by the Agreement can enter its membership.
The authorized capital of the Bank for Economic Cooperation amounted to just over 300 million rubles being transferred. The size of the share contributed by each participant is determined based on the level of GDP of the participating 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 economics, developing national economies of members and strengthening trade relations.
The International Bank for Economic Cooperation performs the following functions:
- Performing international transfers in transferable rubles.
- Lending to external trade operations between participants.
- Attraction and storage of transferable rubles.
- Opening of gold deposits, the process of buying and selling gold.
- Issuance of cash guarantees to member countries.
- Financing of large enterprises located in the countries of the Bank.
The International Bank for Economic Cooperation is an intermediary between the participating countries. It is designed to ensure the timely and full fulfillment of obligations by countries to each other.
Member States
The Bank currently includes the following member countries: the Republic of Bulgaria, the Republic of Poland, the Russian Federation, Romania, the Czech Republic, the Socialist Republic of Vietnam, Mongolia, and the Slovak Republic.
In all these countries, the Moscow Bank for Economic Cooperation has a wide network of correspondent banks. He is assigned the international identification code of a legal entity. Due to the fact that the Bank includes countries of the European Union, the Bank is not subject to inclusion in the sanctions list. This decision was made at the EU Council.
Bank Management Bodies
The Bank is managed by two administrative structures: the Board of the Bank and the Council of the Bank.
The Council is the supreme body. He manages the Bank, establishes the main directions of activity and development of the International Economic Bank, approves investment, credit and other plans, issues orders to the Bank's Management Board, elects the bodies of the Management Board, and carries out other monetary orders of member countries.
The Management Board is an executive body of the Bank. Within the limits of its authority, this body is engaged in direct 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 are appointed by the Council of the Bank by prior agreement. Moreover, each country, regardless of the contribution to the charter 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 adopted, 100% of the votes are in favor.
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 of the most popular forms of lending: settlement credit and term.
A settlement loan is issued in the amount of not more than 2 percent of the monetary turnover of a 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. This loan is repaid automatically upon receipt of funds to the account of the debtor country. This type of lending occupies more than 80 percent of the total number of loans issued by the International Bank for Economic Cooperation.
The second type is an urgent loan issued for a period of up to a year. It is issued to balance the trade balance, increase trade, seasonal needs and more. It has preferential interest rates. The size of interest rates on loans and terms of repayment is determined by the Council of the Bank. The amount of the country's contribution to the authorized capital is not affected by the amount of the loan. Loans are issued from borrowed and own funds of the Bank.
The deposit rate is also determined by the Board, depending on profitability. Thus, the interest rate on the annual deposit is approximately 4 percent, with a contribution for six months 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 operations on mutual settlements between countries. All settlements of participants are made in a single currency on behalf of the national banks of the countries in the amount of their available funds.
Instant payment collection is the main advantage of payments in foreign currency over other forms. In order to transfer money, it is enough to draw up a payment order - and the Bank will provide a quick transfer.