how a multilateral development bank mdb works
multilateral development banks are subject to international law they and other international financial institutions such as the international monetary fund imf originated in the waning days of world war ii when the united states and its allies established the bretton woods institutions to rebuild war ravaged nations and stabilize the post war international financial system the world bank which has been semi officially dominated by the u s since its founding is one of these institutions unlike commercial banks mdbs do not seek to maximize profits for their shareholders instead they prioritize development goals such as ending extreme poverty and reducing economic inequality they often lend at low or no interest or provide grants to fund projects in infrastructure energy education environmental sustainability and other areas that promote development at a 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 according to the u s department of the treasury along with financial assistance multilateral development banks often provide member nations with advisers auditors and expert assistance in implementing and monitoring bank funded projects types of multilateral development banksthere are two main forms of multilateral development banks the first which includes the largest and best known institutions makes loans and grants these banks often distinguish between poorer borrowing members and wealthier non borrowing members examples include the world bank founded in 1945 and the inter american development bank idb founded in 1959 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 founded in 1969 is an example of this type according to the world bank s 2019 annual report the organization disbursed 49 4 billion during the year to member countries in the form of grants and low interest loans special considerationsmany countries have chafed at the u s s influence over the world bank and regional mdbs such as the asian development bank founded in 1966 and based in the philippines in october 2013 chinese president xi jinping proposed the asian infrastructure investment bank aiib as an alternative to these american dominated institutions the aiib began operations in 2016 with headquarters in beijing the u s reportedly attempted to discourage allies from signing on to the project putting pressure on south korea and australia in particular both ended up joining along with 58 other members and 22 prospective members as of 2019 the aiib has grown to 70 members and 23 prospective members major multilateral development banksthe following is a list of the major multilateral development banks ranked by total assets as of dec 31 2018 except for the world bank group which reflects dec 31 2019 assets exchange rates are as of april 15 2020 