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The Center for Global Development convened a high level panel on the future of multilateral development banking in 2015. The geographically diverse group includes leading voices from the private sector and academia, as well as those with distinguished careers in the public sector. By bringing together a group that broadly reflects the diversity of the MDBs’ shareholder countries, we expect to provide useful guidance to the policy community at a time of considerable change for the MDBs. The panel's work has culminated in a report to the shareholders of the MDB system with five key recommendations.
Find CGD’s previous work on the future of the World Bank here.
The multilateral development banking model, first introduced 70 years ago at Bretton Woods, has proven to be remarkably durable. The innovation at the time, embodied in the International Bank for Reconstruction and Development (IBRD), was to capitalize a multilateral institution with public funds from shareholder governments, so that the “bank” could leverage those funds through private borrowing and lend the proceeds to member countries for “development” purposes.
The basic model is still with us today in the IBRD and has been replicated elsewhere, reflected in the rise of regionally based multilateral development banks (MDBs). Not only has multilateral development banking lasted more than seven decades, it seems to be enjoying a renaissance. The traditional multilateral development banks have all seen shareholder-led expansions of their capital within the past five years, other regional development banks have grown significantly (from the CAF in Latin America to the Saudi-based Islamic Development Bank to the EU’s massive European Investment Bank), and perhaps most significant, a new generation of institutions has emerged, largely spearheaded by the Chinese government, along with other large emerging-market governments.
How can the international community best capitalize on the resurgent MDBs? What are the core missions that should guide their activities? How big should they be, and how should they deploy their resources? What “rules of the road” should they follow when it comes to environmental standards and procurement rules? How are they best governed to ensure their legitimacy and effectiveness?
The high level panel report addresses these fundamental questions as part of an effort to provide a new policy blueprint for multilateral development banks, both new and old. Starting with the basic elements of financing and governance first defined seventy years ago, the panel's report identifies what is essential, what is adaptable, and what no longer serves a useful purpose in MDBs.
Montek Singh Ahluwalia, Distinguished Visiting Professor Stern School of Business, New York University
Lawrence H. Summers, Charles W. Eliot University Professor and President Emeritus, Harvard University
Andrés Velasco, Professor of Professional Practice in International Development, School of International and Public Affairs, Columbia University
Caroline Anstey, Global Head UBS and Society, UBS
Afsaneh M. Beschloss, Founder, President and CEO, The Rock Creek Group
Chris Elias, President, Global Development Program, The Bill & Melinda Gates Foundation
We visited the AIIB a few weeks ago, and heard more about the emerging AIIB model: What is likely to be the same—as at the five big legacy banks (the World Bank and the four regional development banks) and what is likely to be different.
The multilateral development banking (MDB) system is regarded as having been remarkably successful—but is the model still fit for purpose? CGD president Nancy Birdsall and senior fellow Scott Morris delve into a new CGD report's recommendations on how to make MDBs more effective.
In the face of growing U.S. indifference to multilateral development institutions, China is stepping up. The circumstances around the creation of the Asian Infrastructure Investment Bank (AIIB) have usefully brought to light a longer trend that will ultimately lead to a diminution of U.S. leadership in the multilateral development system.
From the article:
The multilateral development banking system is due for a major overhaul, according to a high-level panel assembled by the Center for Global Development. Institutions including the World Bank and regional MDBs need to recalibrate their missions, rethink their values, and work better as a collective system if they are to stay relevant, participants in the project concluded. The World Bank, the expert panel said, should establish “global public goods,” beneficial resources such as clean air or a stable climate, which can only be managed through cooperation.
Read the full article here.
Lawrence H Summers, former US Treasury Secretary, Harvard professor, and the CGD Board Chair, explains why the World Bank and the regional multilateral development banks (MDBs) are well-placed to help address some of today’s urgent problems, including climate change, pandemics, and the problems of large-scale forced migration.