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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
From the article:
Finance and development ministers from around the world, who are gathered in Washington this week, will consider whether the World Bank needs more resources -- a new infusion of capital to permit more lending and new contributions from traditional rich-country donors to help the poorest countries.
But a bigger World Bank is not necessarily a better one, and any consideration of new money for it or for the regionally based multilateral development banks demands a fundamental look at their mandates and operations in the face of new development challenges in today’s global landscape.
Read the full article here.
Finance and development ministers gathered in Washington this weekend at the World Bank’s annual meetings have an ambitious agenda of topics to discuss. But the truth is, it is not nearly ambitious enough. A new CGD report by a high level commission of development and finance experts explains why and what should happen.
Recognizing the growing global premium on environmental sustainability in a climate-challenged world, we call on member governments of the World Bank to take the first step in that direction by renaming the International Bank for Reconstruction and Development (IBRD) as the International Bank for Reconstruction and Sustainable Development (IBRSD)—and to reshape its mission accordingly, toward leadership on issues of the global commons or global public goods that are squarely in the development domain and require a global shareholder base to respond collectively. Shareholders should in turn look to the regional MDBs to take leadership in supporting the new imperative of sustainable development through country and regional operations across all sectors, but particularly in increasing investment in infrastructure that takes into account the logic of low-carbon and climateresilient economies in the developing world. In line with this approach to differentiated roles within an MDB system, the panel makes five recommendations to better realize the MDB system’s potential for meeting today’s development challenges.
The African Development Bank is widely praised these days as one of the premier financial institutions in Africa. The past decade saw it place much greater emphasis on infrastructure financing, a change brought about in part by the instincts of its former president Donald Kaberuka. In this week's podcast, Kaberuka discusses how the AfDB’s success came about.
Kaberuka is currently a Hauser Leader-in-Residence at the John F. Kennedy School of Government at Harvard University. At CGD he will be working on finance and development issues, including serving as a member of our High-Level Panel on Multilateral Banking, which will issue its report in the coming months.