Chapter 21: International Financial Institutions
Chapter 21 Introduction
Learning Objectives
After reading this chapter, you should be able to
- Describe the global financial system and key actors in it.
- Discuss different types of international financial institutions.
- Discuss the role of Canadian banks in International Markets.
- Introduce export credit agencies as international financial institutions.
Think About It!
Video: What Is a Financial Institution?
Before reading this chapter, watch this video outlining the role of financial institutions in trade finance.
Source: Easy Peasy Finance. (2021, August 24). What is a financial institution: A simple explanation for kids and beginners [Video]. YouTube. https://www.youtube.com/watch?v=uJh1MzXuyKw
Test Yourself
Introduction
Financial institutions are the heart of any financial system. Especially in international trade where multiple nations are involved, the global financial system plays a major role by establishing and supporting key players such as central banks, international financial institutions and trade organizations and offering financial services that further support import and export. Where central banks play a crucial role in managing the country’s economy and financial system, international financial institutions oversee such financial systems by acting as intermediaries between suppliers and demanders of funds.
Examples of international financial institutions are the World Bank, European Development Bank, International Monetary Fund, Inter-American Development Bank, Netherlands Development Finance Company FMO, African Association of Central Banks (AACB), etc. There is another category of financial institutions that has evolved over the years and is known as Export credit agencies. Every country has at least one such agency which helps exporters reduce non-payment risk by providing services such as export credit insurance, loan guarantees and direct lending services.
