The term World Bank is often used in reference to certain subsidiaries of the World Bank Group.
Based in Washington DC in the United States, the World Bank Group operates five umbrella institutions: the International Bank for Reconstruction and Development (IBRD); the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Center for Settlement of Investment Disputes (ICSID).
The IBRD and the IDA are the two World Bank Group subsidiaries which deal exclusively with governments, and these two institutions combined are commonly referred to simply as The World Bank.
The World Bank Group manages international loans on behalf of its shareholders – the largest of which are the governments of the United States (17.58% share), Japan (7.58% share), China (4.88% share), Germany (4.42% share), France (4.14% share) and the United Kingdom (4.14% share). It also issues its own bonds and other debt instruments. Of the world’s 195 fully-recognized national governments, 189 governments are IBRD members and 173 are IDA members.
Founded in 1944 during the Bretton Woods conference with the backing of British economist John M. Keynes and U.S. Treasury department official and alleged Soviet agent Harry D. White, the World Bank group has the stated aim of ending poverty, boosting prosperity and creating sustainable growth.
The World Bank Group provides loans on a national level in exchange for the right to demand changes in the recipient country’s government policies. The World Bank Group reserves the right to dictate how loans will be used, and to collect interest from borrowers on behalf of its shareholders. Interest charged on loans is based on the creditworthiness of countries (as per rating agencies) and other factors. The World Bank Group also provides interest-free loans for certain kinds of projects.
The World Bank Group provides a platform through which governments with poor creditworthiness can receive loans to fund public projects. However, it has also been the subject of much controvery, with cirtics claiming that it interferes with democracy by imposing policy changes on recipient governments and that it funds socially and environmentally-destructive projects. Its hesitance in forgiving debt for projects which have been clear economic failures is another point of controversy.
