What Is the World Bank Group?

The World Bank Group (WBG) was established in 1944 to rebuild post-World
War II Europe under the International Bank for Reconstruction and
Development (IBRD).1 It is one of a variety of organizations seeking to
shape the world economy.

Today, the World Bank functions as an international organization that fights

poverty by offering developmental assistance to middle-income and low-
income countries. By giving loans and offering advice and training in both
the private and public sectors, the World Bank aims to eliminate poverty by
helping people help themselves. Under the World Bank Group (WBG), there
are complementary institutions that aid in its goals to provide assistance.
(PPT)

KEY TAKEAWAYS

 The World Bank is an international organization that offers

developmental assistance to middle-income and low-income
countries. 
 Founded in 1944, the World Back has 189 member nations and aims to
reduce poverty in the developing world.
 While WBG strives to create a poverty-free world, there are groups
that are passionately opposed to the international patron as critics feel
that its efforts actually make things worse.

Membership in the World Bank

There are 189 member countries that are shareholders in the IBRD, the
primary arm of the WBG. To become a member, however, a country must
first join the International Monetary Fund (IMF).3 The size of the World
Bank's shareholders, like that of the IMF's shareholders, depends on the size
of a country's economy. Thus, the cost of a subscription to the World Bank is
a factor of the quota paid to the IMF.

Joining the IMF comes with a variety of responsibilities that help it carry out
its functions. There is an obligatory subscription fee, which is equivalent to
88.29% of the quota that a country has to pay to the IMF. In addition, a
country is obligated to buy 195 World Bank shares (US$120,635 per share,
reflecting a capital increase made in 1988). Of these 195 shares, 0.60%
must be paid in cash in U.S. dollars, while 5.40% can be paid in a country's
local currency, in U.S. dollars, or in non-negotiable non-interest bearing
notes. The balance of the 195 shares is left as "callable capital," meaning the
World Bank reserves the right to ask for the monetary value of these shares
when and if necessary. A country can subscribe to a further 250 shares,
which do not require payment at the time of membership but are left as
"callable capital."4

The president of the World Bank comes from the largest shareholder, which
is the United States, and members are represented by a board of
governors.5 Throughout the year, however, powers are delegated to a board
of 25 executive directors (EDs). 6 The five largest shareholders—the U.S.,
U.K., France, Germany, and Japan—each have an individual ED, and the
additional 19 EDs represent the rest of the member states as groups of
constituencies. Of these 19, however, China, Russia, and Saudi Arabia have
opted to be single-country constituencies, which means that they each have
one representative within the 19 EDs. This decision is based on the fact that
these countries have large, influential economies, requiring that their
interests be voiced individually rather than diluted within a group. The World
Bank gets its funding from rich countries, as well as from the issuance of
bonds on the world's capital markets.

The World Bank serves two mandates:

 To end extreme poverty, by reducing the share of the global

population that lives in extreme poverty to 3% by 2030.
 To promote shared prosperity, by increasing the incomes of the
poorest 40% of people in every country. 7

What is the difference between the World Bank Group and the IMF?

Founded at the Bretton Woods conference in 1944, the two institutions have
complementary missions. The World Bank Group works with developing
countries to reduce poverty and increase shared prosperity, while
the International Monetary Fund serves to stabilize the international
monetary system and acts as a monitor of the world’s currencies. The World
Bank Group provides financing, policy advice, and technical assistance to
governments, and also focuses on strengthening the private sector in
developing countries. The IMF keeps track of the economy globally and in
member countries, lends to countries with balance of payments difficulties,
and gives practical help to members.  Countries must first join the IMF to be
eligible to join the World Bank Group; today, each institution has 189
member countries.

The World Bank Group

The World Bank Group is one of the world’s largest sources of funding and
knowledge for developing countries. Its five institutions share a commitment
to reducing poverty, increasing shared prosperity, and promoting sustainable
development.

Together, IBRD and IDA form the World Bank, which provides financing,

policy advice, and technical assistance to governments of developing
countries.  IDA focuses on the world’s poorest countries, while IBRD assists
middle-income and creditworthy poorer countries. 

IFC, MIGA, and ICSID focus on strengthening the private sector in

developing countries.  Through these institutions, the World Bank Group
provides financing, technical assistance, political risk insurance, and
settlement of disputes to private enterprises, including financial institutions.

The World Bank is not a bank in the conventional sense of the word.
Instead, it consists of two organizations. One is the International Bank for
Reconstruction and Development, which provides loans, credit, and grants. 3
The second is the International Development Association, which provides
low- or no-interest loans and grants to low-income countries.

the Bank works closely with three other organizations in the World Bank
Group:

1. The International Finance Corporation (IFC) provides investment,

advice, and asset management to companies and governments. 5
2. The Multilateral Investment Guarantee Agency (MIGA) insures lenders
and investors against political risk such as war.6
3. The International Centre for the Settlement of Investment Disputes
(ICSID) settles investment disputes between investors and countries. 7

The Bank's 189 member countries share ownership.8  The United States has a
controlling voting interest.9

The Head of the World Bank Group

On February 6, 2019, President Donald Trump nominated David Malpass to

be president of the World Bank. He was undersecretary of the U.S. Treasury
Department for international affairs. Malpass had criticized bank lending to
China but needed the support of China and Japan, who are the top two
World Bank shareholders after the United States. He was officially approved
on April 9, 2019.2 0
The World Bank president reports to a 25-member Board of Executive
Directors.2 1 Among the contributing countries are France, Germany, Japan,
the United Kingdom, and the United States.8

The person nominated by the president of the United States has been

selected the World Bank president since its founding. The voting power of
the United States is 15.62%, making it the largest shareholder. 9 Many
members complain that the Bank represents the interests of the developed
world and not the poor countries it assists.

Jim Yong Kim, M.D., Ph.D., was president from 2012 to 2019. 2 2 He resigned
on February 1, 2019, three years before his term ended, to join Global
Infrastructure Partners, a private equity fund. Prior to his time with The
World Bank, Dr. Kim had been the president of Dartmouth College and
advocated for improved health service.2 3

Robert Zoellick was president from 2007 to 2012. During President George
H.W. Bush's administration, Zoellick served with Secretary of State James
Baker, III, as Under Secretary of State for Economic and Agricultural Affairs.
Zoellick held executive positions in Fannie Mae from 1993 to 1997 and the
Office of Trade Representative from 2001 to 2005. 2 4 From there, he went to
the State Department in 2005 until 2006 and then on to Goldman
Sachs from 2006 to 2007.2 5

The Bank has thousands of employees from over 170 countries.

The World Bank Fights Climate Change

The World Bank has joined the fight against climate change because it could
push much more of the world's population into poverty by 2030. It has
committed $83 billion to climate-related improvements in developing
countries and plans to add 30 gigawatts of renewable energy, support early
warning systems for 100 million people, and develop climate-smart
agriculture for 40 countries. The Bank also uses the true cost of carbon in all
its projects.2 7

Statistics and Reports

The World Bank provides a wealth of downloadable data for more than 200
countries. In 2010, the Bank launched an Open Data website, which
provides free access to hundreds of major indicators, including:

 Climate change, the environment, and energy

  Health, such as life expectancy
 Urban development and infrastructure
 Labor, income, and education
 Government, economic policy, and sovereign debt
 Demographics such as poverty, gender, and aid effectiveness
 Business, agriculture, and financial2 8

History of The Word Bank

The 1944 Bretton Woods Conference established The World Bank. Its loans

helped European countries rebuild after World War II.2 9 That made it the
world's first multilateral development bank. 

It was funded through the sale of bonds. Its first loans were to France and
other European countries.2 9 Since then, the Bank has worked
with developing countries such as India and China on projects that include
rail.

World Bank lending became controversial. Many countries used their loans to
prevent a sovereign debt default. That debt was often a result of
overspending and extensive borrowing. Even with the World Bank’s help,
many countries devalued their currencies, which caused hyperinflation. 

To combat this, the Bank required austerity measures. Borrowing countries

had to agree to cut back on spending and support their currency.
Unfortunately, this usually caused a recession, making it difficult to repay
the Bank's loans. 

https://www.investopedia.com/articles/world-bank-definition/#:~:text=The
%20World%20Bank%20is%20an,poverty%20in%20the%20developing
%20world.
https://www.worldbank.org/en/about/history/the-world-bank-group-and-
the-imf
https://www.thebalance.com/the-purpose-of-the-world-bank-3306119

Member countries govern the World Bank Group through the Boards of

Governors and the Boards of Executive Directors. These bodies make all
major decisions for the organizations.

To become a member of the Bank, under the IBRD Articles of Agreement, a

country must first join the International Monetary Fund (IMF). Membership
in IDA, IFC and MIGA are conditional on membership in IBRD.
In tandem with the IMF, and in consultation with other World Bank Group
staff, the Corporate Secretariat Vice Presidency coordinates the process for
new membership and maintains the information relating to the status of
membership which includes the membership lists.

With 189 member countries, staff from more than 170 countries, and
offices in over 130 locations, the World Bank Group is a unique
global partnership: five institutions working for sustainable
solutions that reduce poverty and build shared prosperity in
developing countries.

Founded in 1944, the International Bank for Reconstruction and

Development—soon called the World Bank—has expanded to a closely
associated group of five development institutions.  Originally, its loans
helped rebuild countries devastated by World War II.  In time, the focus
shifted from reconstruction to development, with a heavy emphasis on
infrastructure such as dams, electrical grids, irrigation systems, and roads. 
With the founding of the International Finance Corporation in 1956, the
institution became able to lend to private companies and financial
institutions in developing countries.  And the founding of the International
Development Association in 1960 put greater emphasis on the poorest
countries, part of a steady shift toward the eradication of poverty becoming
the Bank Group’s primary goal.  The subsequent launch of the International
Centre for Settlement of Investment Disputes and the Multilateral
Investment Guarantee Agency further rounded out the Bank Group’s ability
to connect global financial resources to the needs of developing countries. 

WHERE WE WORK

The World Bank Group works in more than 170 countries, working
with partners in the public and private sectors in their efforts to end
poverty and tackle some of the most pressing development

challenges.

The Boards of Governors consist of one Governor and one Alternate

Governor appointed by each member country. The office is usually held by
the country's minister of finance, governor of its central bank, or a senior
official of similar rank. The Governors and Alternates serve for terms of five
years and can be reappointed.
If the country is a member of the Bank and is also a member of
the International Finance Corporation (IFC) or the International
Development Association (IDA), then the appointed Governor and his or her
alternate serve ex-officio as the Governor and Alternate on the IFC and IDA
Boards of Governors. They also serve as representatives of their country on
the Administrative Council of the International Center for Settlement of
Investment Disputes (ICSID) unless otherwise noted. Multilateral
Investment Guarantee Agency (MIGA) Governors and Alternates are
appointed separately.

Role of the Boards of Governors

All powers of the Bank are vested in the Boards of Governors, the Bank's
senior decision-making body according to the Articles of Agreement.
However, the Boards of Governors has delegated all powers to the Executive
Directors except those mentioned in the Articles of Agreement. These
powers include:

 Admit and suspend members;

 Increase or decrease the authorized capital stock;

 Determine the distribution of the net income of the Bank;

 Decide appeals from interpretations of the Articles of Agreement by

the Executive Directors;

 Make formal comprehensive arrangements to cooperate with other

international organizations;

 Suspend permanently the operations of the Bank;

 Increase the number of elected Executive Directors; and

 Approve amendments to the Articles of Agreement.

The World Bank Group Boards of Directors refers to four separate

Boards of Directors, namely the Board of the International Bank for
Reconstruction and Development (IBRD), the International Development
Agency (IDA), the International Finance Corporation (IFC) and
the Multilateral Investment Guarantee Agency (MIGA). Each Board is
responsible for the general operations of their respective organization. The
Executive Directors as individuals cannot exercise any power nor commit or
represent the Bank unless specifically authorized by the Board of Directors to
do so. Executive Directors are appointed or elected by the Governors.
Separate elections are held for the Bank and MIGA Board of Directors.  Bank
Executive Directors serve ex-officio as Directors for IFC and IDA.  The
current Boards of the World Bank Group consist of 25 Directors*. In line with
the Bank's Articles, the Executive Directors select the World Bank President,
who is the Chairman of the Board of Directors. The President is the presiding
officer, and ordinarily has no vote except a deciding vote in case of an
equally divided Board. 

Appointment and Election of Executive Directors

The 25 Executive Directors who each represent a country, or constituency of

countries, are either appointed or elected to the position. In the case of a
constituency of countries, their constituency arrangements, including which
country will nominate for the position of Executive Director, are regulated by
internal constituency agreements. The Bank has no role in negotiating or
administering these constituency agreements - they are matters for
government shareholders within the constituency. For elections, a majority
of the votes cast shall be required for successful election of a nominee.
Regular elections of Executive Directors take place every two years and are
governed by election rules approved by the Board of Governors. The Bank’s
role in elections is to administer the election in accordance with the
requirements of the Articles.

Each Executive Director appoints an Alternate Executive Director who has

full power to act for him or her when he or she is not present. Furthermore,
Senior Advisors and Advisors assist the Executive Directors in their work,
who can, along with the Alternates to Executive Directors, attend most
Board meetings in an advisory capacity, without voting rights

Previous Compositions

The first Board consisted of 12 Executive Directors, as provided under

the IBRD Articles of Agreement, Article V Section 4(b), of which five were
appointed and seven were elected. Increases in the number of elected
Executive Directors require a decision of the Boards of Governors by an 80%
majority of the total voting power. Before November 1, 1992, there were 22
Executive Directors, 17 of whom were elected. In 1992, in view of the large
number of new members that had joined the Bank, the number of elected
Executive Directors increased to 19. The two new seats, Russia and a new
group around Switzerland, brought the total number of Executive Directors
to 24. An additional chair for Sub-Saharan Africa was added effective
November 1, 2010, bringing the size of the Board to 25 chairs.

Voting Powers

The voting power of each Member country is based on the number of shares
it holds. Shares are allocated differently in each organization, resulting in
different voting powers.

The Corporate Secretariat is responsible for coordinating the process of

membership as well as assisting members to complete their subscriptions to
their allocated shares under periodic capital increases in IBRD, IDA, IFC, and
MIGA. It provides advice on the procedures for subscribing to additional
shares as authorized under resolutions approved by the Boards of
Governors, including required documentation and capital subscriptions
payments. 

thics Matters

The Code of Conduct for Board Officials (pdf) that took effect on November

1, 2018, supersedes the Code of Conduct and Ethics Committee Procedures
approved in November 2007.

The Code of Conduct for Board Officials sets forth principles and ethical
standards for the Executive Directors, the Presidents of each of the
organizations, Executive Director Designates, Executive Director Post-
Designates, Alternate Executive Directors, Alternate Executive Director
Designates, Alternate Executive Director Post-Designates, Temporary
Alternate Executive Directors, Senior Advisors, and Advisors to Executive
Directors (collectively, “Board Officials”) in connection with, or having a
bearing upon, their status and responsibilities in the organizations of the
World Bank Group.

The Code of Conduct provides that, as these officials are entrusted with
responsibilities as prescribed in the Articles of Agreement, By-Laws, and
related documents of the organizations, their personal and professional
conduct must comply with the standards and procedures set forth in the
Code of Conduct. Pursuant to the Code of Conduct, the Board has
established an Ethics Committee to address ethics matters concerning Board
Officials in order to ensure sound governance pursuant to the Code of
Conduct. The Ethics Committee has the authority to advise Board Officials or
the President on matters related to conflict of interests, annual disclosures,
or other ethical aspects of conduct in respect of Board Officials or the
President, and to investigate alleged misconduct by Board Officials or the
President.

*While the IFC Articles of Agreement and the MIGA Convention designate

Boards of Directors, when referring to the World Bank Group Board
members, they are collectively called Executive Directors.

WORLD BANK

President, World Bank Group David Malpass

David R. Malpass (@DavidMalpassWBG), was selected as 13th President of

the World Bank Group by its Board of Executive Directors on April 5, 2019.
His five-year term began on April 9.

Mr. Malpass previously served as Under Secretary of the Treasury for

International Affairs for the United States. Mr. Malpass represented the
United States in international settings, including the G-7 and G-20 Deputy
Finance Ministerial, World Bank–IMF Spring and Annual Meetings, and
meetings of the Financial Stability Board, the Organization for Economic
Cooperation and Development, and the Overseas Private Investment
Corporation (PPT).

In 2018, Mr. Malpass advocated for the capital increase for the IBRD and IFC
as part of a reform agenda featuring sustainable lending practices, more
efficient use of capital, and a focus on raising living standards in poor
countries. He was also instrumental in advancing the Debt Transparency
Initiative, adopted by the Bank Group and the IMF, to increase public
disclosure of debt and thereby reduce the frequency and severity of debt
crises. (PPT)

1818 H Street, NW Washington, DC 20433 USA (202) 473-1000

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The Bretton Woods Conference, 1944

The Bretton Woods Conference, officially known as the United Nations

Monetary and Financial Conference, was a gathering of delegates from 44
nations that met from July 1 to 22, 1944 in Bretton Woods, New Hampshire,
to agree upon a series of new rules for the post-WWII international
monetary system. The two major accomplishments of the conference were
the creation of the International Monetary Fund (IMF) and the International
Bank for Reconstruction and Development (IBRD).

In July 1945, Congress passed the Bretton Woods Agreements Act,

authorizing U.S. entry into the IMF and IBRD. The two organizations officially
came into existence on December 27, 1945. The fixed exchange rate regime
established at Bretton Woods endured for the better part of three decades;
only after the dollar exchange crises of August 1971 (when President Richard
Nixon suspended the dollar's convertibility into gold) and February/March
1973 did floating exchange rates become the norm for the currencies of the
major industrialized nations.

Bretton Woods Conference, formally United Nations Monetary and

Financial Conference, meeting at Bretton Woods, New Hampshire (July 1–
22, 1944), during World War II to make financial arrangements for the
postwar world after the expected defeat of Germany and Japan.

The conference was attended by experts noncommittally representing 44

states or governments, including the Soviet Union. It drew up a project for
the International Bank for Reconstruction and Development (IBRD) to make
long-term capital available to states urgently needing such foreign aid, and a
project for the International Monetary Fund (IMF) to finance short-term
imbalances in international payments in order to stabilize exchange rates.
Although the conference recognized that exchange control and
discriminatory tariffs would probably be necessary for some time after the
war, it prescribed that such measures should be ended as soon as possible.
After governmental ratifications the IBRD was constituted late in 1945 and
the IMF in 1946, to become operative, respectively, in the two following
years.