IMFQuotaSubscriptionsThequotasubscriptionofeachmembernation,whichisdenominatedinSDRs,dependsonthenation’srealnationalincome.Acountry’squotasubscriptiondeterminesitsvotingsharewithintheIMFandhowmuchitisabletoborrowunderstandardIMFcreditarrangements.*TheWorldBankNarrowlyspecialized,makingloanstoabout100developingnations.IncontrasttotheIMF,theWorldBankhasalwaysspecializedinlong-termloansdesignedtospurlong-termdevelopmentandgrowth.TypicallygovernmentsseekWorldBankloansforspecificprojectsasopposedtosupplementingtheiroverallbudget.ThewealthiestnationsfundmostoftheWorldBank’sactivities,thoughtheBankalsoraisesfundsinprivatecapitalmarkets.*Chapter6

InternationalBankingCentralBanksandSupranationalFinancialPolicymakingInstitutionsINTERNATIONALMONETARYANDFINANCIALECONOMICSThirdEdition*InternationalDimensionsofFinancialIntermediationThefinancingofcapitalinvestmentprojectsmaybedirectorindirect.DirectFinance:Whensaversallocatesomeoftheirwealthtothepurchaseofabondissuedbyacompany,theyeffectivelymakeadirectloantothecompany.IndirectFinance:Whenabankingfirmpoolstogetherthefundsofdepositholdersandpurchasesabondissuedbyacompany,saversareindirectlylendingfundstothecompany.*IndirectFinanceThroughFinancialIntermediationFinancialintermediariesfacilitateindirectfinancingbyissuingtheirownfinancialinstrumentsandusingthefundstheyobtainfromsaverstofinancecapitalinvestmentsofbusinesses.*TheRoleofFinancialIntermediariesSaversmaydesiretodirectfundsthroughafinancialfirmbecauseofasymmetricinformation.AsymmetricInformation:Possessionofinformationbyonepartyinafinancialtransactionthatisnotavailabletotheotherparty.*AsymmetricInformationProblemsAsymmetricinformationcanleadtoseveraltypesofproblemsinfinancialmark