Final Exam Flashcards
The IMF’s capacity development efforts focus on:
• Public Finances
• Monetary and Financial Policies
• Macroeconomic Frameworks and Tools
• Legal Frameworks
• Statistics
The IMF issues an international reserve asset known as this, that can supplement the official reserves of member countries participating in the this Department.
(currently all members of the IMF).
Special Drawing Rights
Member quotas are the primary source of
IMF financial resources. A member’s quota
broadly reflects its size and position in the
world economy.
• Credit arrangements between the IMF and a group of members and institutions provide supplementary resources.
• As a third line of defense, member countries have also committed resource to the IMF through bilateral borrowing agreements (BBAs)
Resources
Governance and Organization primary aims to
• Promote international monetary cooperation;
• Facilitate the expansion and balanced growth of
international trade;
• Promote exchange stability;
• Assist in the establishment of a multilateral system of payments; and make resources available
(with adequate safeguards) to members
experiencing balance-of-payments difficulties
An international organization
dedicated to providing financing, advice, and
research to developing nations to aid their economic advancement.
World Bank
Currently, the World Bank has two stated goals that it aims to achieve by 2030.
- The first is to end extreme poverty by decreasing the number of people living on less than $1.90 a day to below 3% of the world population.
- The second is to increase overall prosperity by increasing income growth in the bottom 40% of every country in the world.
• To end extreme poverty and boost prosperity on a livable planet.
Mission of world bank
The world bank is made up of how many member countries?
189
What are the sectors of world bank?
the International Bank of Reconstruction
and Development (IBRD), the International
Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral
Investment Guarantee Agency (MIGA).
The only global international organization dealing with the rules of trade between nations.
• The overall objective of this is to help its members use trade as a means to raise living standards, create jobs and improve people’s lives
World Trade Organization
How many member countries in WTO?
164
Is the growing connectivity of financial
institutions and markets around the world. It refers to the increasing of flow of capital,
investment, and financial services across
countries, which is made possible by
technological improvements, deregulation,
and globalization. This process has farreaching ramifications for economic growth, stability, and policymaking at the national and international levels.
Global Financial Integration
What are the potential benefits of Global Financial Integration?
- Access to a broader range of investment opportunities
- diversification of risks
- potentially higher economic growth through increased capital flows
World Capital Markets may allow a country to engage in this allowing the countries to borrow in bad times and lend in good times.
Consumption Smoothing
The ability to draw upon the international pool of resources that financial openness gives access to may also affect this . FDI may facilitate the transfer or diffusion of managerial and
technological know-how-particularly in the form of new varieties of capital inputs and improve the skills composition of the labor force as the result of “learning by doing” effects, investment in formal education and on-the-job training.
Domestic Investment and Growth
The free flow of capital across borders can encourage countries to adopt more disciplined microeconomic policies and reduce the frequency of policy mistakes, by increasing the reward for good policies and penalizing bad ones.
Enhanced Macroeconomic Discipline
It improves the efficiency of banking
operations by optimizing procedures, reducing costs, and improving services. Financial stability refers to a system’s ability to maintain smooth operation while absorbing shocks. Increased efficiency allows banks to operate more smoothly,
reduce risks, and contribute to overall financial stability
Increased Banking System Efficiency and
Financial Stability
Examples for Increased banking system efficiency include
- Faster transaction processing times
- Improved customer experience
- Cost-saving measures
banks utilize sophisticated risk management tools to diversify their lending portfolios, reducing the concentration of risk in any single sector or asset class.
Diversification of Risk
banks develop comprehensive these to address potential crises or disruptions in the financial markets.
Contingency Planning
What are the potential cost of concentration of Capital Flows and Lack of Access?
- High degree of concentration capital flows and lack of access to financing for smaller countries
The capital inflows that are associated with an open capital account may raise domestic investment, their impact on long-run growth may be limited (if non negligible) if such inflows are used to finance speculative or low-quality domestic investments
Domestic Misallocation of Capital Flows
difficulty and cost of pursuing aggressive sterilization policies
Rapid Monetary Expansion
effect on capital inflows on domestic spending
Inflationary Pressures
currency value rises, affecting trading
Real Exchange Rate Appreciation
larger external deficits
Widening Current Account Deficits
Currency depreciation and trade balance correction
Flexible Exchange Rate:
Currency crisis and increase financial instability
Fixed Exchange Rate
A high degree of financial openness may
also be conductive to a high degree of volatility in capital movements, a specific manifestation of which being large reversals in short term flows associated with speculative pressures on the domestic currency.
Herding, Contagion, and Volatility of Capital
Flows
Foreign banks may ration credit to small firms to a larger extent than domestic banks, and concentrate instead on larger and stronger ones.
Risk of Entry by Foreign Banks
Also known as electronic fund transfer (EFT), uses computer and electronic technology in place of checks and other paper
transactions. EFTs are initiated through devices like cards or codes that let you, or those you authorize, access your account.
Electronic Banking
Also known as net-banking or online banking, is an electronic payment system
that enables the customer of a bank or a financial institution to make financial or non-financial transactions online via the internet. This service gives online access to almost every banking service, traditionally available through a local branch including fund transfers, deposits, and online bill payments to the customers.
Internet Banking
electronic terminals that let you bank almost virtually any time. To withdraw cash, make deposits, or transfer funds between accounts, you generally insert an ATM card and enter your PIN.
ATM
lets you authorize specific deposits — like paychecks, Social Security checks, and other benefits — to your account on a regular basis. You also may preauthorize direct withdrawals so that recurring bills — like insurance premiums, mortgages, utility bills, and gym memberships — are paid automatically.
Direct Deposits
let you call your financial institution with instructions to pay certain bills or to transfer funds between accounts.
Pay by Phone systems
lets you handle many banking transactions using your personal computer.
Personal Computer Banking
let you make purchases or payments with a debit card, which also may be your ATM card. Transactions can take place in-person, online, or by phone. The process is similar to using a credit card, with some important exceptions: a debit card purchase or payment transfers money quickly from your bank account to the company’s account, so you have to have sufficient funds in your account to cover your purchase.
Debit Card Purchase or Payment Transactions
converts a paper check into an electronic payment in a store or when a company gets your check in the mail
Electronic Check Conversion
This service allows customers to pay for the
purchase through a debit/credit card
instantly.
Point of sale transfer terminals
is a payment system which allows one-toone fund transfer. Using NEFT, individuals and corporates can transfer funds electronically from any bank branch to any individual or corporate with an account with any other bank branch in the country. NEFT service is available 24×7 on internet banking. But, it is a time-restricted service at the bank branch.
National Electronic Fund Transfer
is a continuous settlement of funds individually on an order-by-order basis. This payment system ensures that the receiver’s account gets credited with the funds almost
immediately and not after a certain duration, as is the case with other payment modes
like NEFT. These transactions are tracked
by the RBI, thereby successful transfers are
irreversible. This method is majorly used for large value transfers
Real-time Gross Settlement
is another payment method that transfers
funds in real-time. This is used to transfer
funds instantly within banks across India via
mobile, internet and ATM, which is not only
safe but also economical both in financial
and non-financial perspectives. This is an
inexpensive mode of fund transfer. Other
fund transfer mediums such as NEFT and
RTGS charge significantly higher than this
Immediate Payment System
refers to the synergy between finance and technology, which is used to enhance business operations and the delivery of financial services. This can take the form of software, a service, or a business that provides technologically advanced ways to make financial processes more efficient by disrupting traditional methods
Financial Technology
some of the most used technologies in
fintech, offering the potential to play an even bigger role in the finance industry as developments continue. Some of the fintech applications of these include credit scoring, fraud detection, regulatory compliance, and wealth management
Artificial Intelligence and Machine Learning
Data from customers and markets is of high value to fintech companies. Through large datasets, consumer preferences, spending habits, and investment behavior can be extracted and used to develop predictive analytics. .
Big Data and Data Analytics
refers to predicting how
consumers are likely to behave using past information and a mathematical algorithm. The collected data also helps in formulating marketing strategies and fraud detection algorithms
Predictive analytics
refers to the process of assigning manual, repetitive tasks to robotics instead of humans in order to streamline workflows in financial institutions.
Robotic Process Automation
being adopted at a large scale in the financial industry, primarily due to its ability to securely store transaction records and
other sensitive data. Each transaction is encrypted, and the chances of successful cyber-attacks are relatively low when this technology is employed. This technology is also the backbone of many cryptocurrencies.
Blockchain
like Kickstarter, GoFundMe, and Patreon are the result of developments in fintech. The platforms allow entrepreneurs and early-stage businesses to raise funds from all over the world, allowing them to bypass geographical boundaries and reach
international markets and investors.
Crowdfunding Platforms
applications and gateways are some of the most prevalent uses of fintech. Such applications allow users to carry out banking activities without physically visiting a bank. For example, companies like Venmo and Interac allow customers to send and receive money through smartphones at minimal transaction fees
Mobile Payments
are online investment management services that use algorithms to allocate assets and generate portfolios for customers optimally. They allow users of all age groups to engage in investment activities at low fees with minimal manual effort.
Robo-Advisers
refers to the application of technology to the insurance model, which allows companies to provide tailored insurance services and data security. This helps streamline the insurance process through online claims filing and policy management.
Insuretech
focuses on the automation of compliance processes for financial institutions. It offers fast and cost-effective management of large amounts of data, including transaction records and compliance documents,such as corporate tax returns.
Regtech
