➤  1.  Establishment The International Finance Corporation was established in 1956 to encourage private enterprises and to increase the rate of economic development. The private enterprise is mainly responsible for very high rate of economic development in developed countries. In undeveloped in undeveloped countries, the projects of private competitive enterprises are not in existence on large scale. It is one of the reasons of slow economic growth of these countries. One of the economic backwardness of newly independent countries was that they have to wait for very long time for beginning the process of rapid economic development. There was worry of the failure of democratic system because of the different approach of private enterprises. ➤ 2. Objectives The IFC is an associate institution of the IBRD. Their objects are similar to that of objectives of IBRD. Following are the important objectives of IFC-   1.  To encourage foreign 2.  To enterprises p...

1. Establishment The IBRD was established in 1944. The first half of the 20 th Century was of uncertainties at levels in social, economic and political fields. Developed countries in Europe were eager to increase the size of their kingdom. The world economy was badly affected because of this approach. It resulted in World Depression in 1929. Immediately after Second World Was it was essential to help the countries to come out of social, political and economic difficulties. In order to remove these difficulties the IBRD was established. The important tasks before the IBRD were:- 1. Reconstruction of economies of countries involved in Second World War. 2. Economic Development of countries. The government of India also faces the same problems of reconstruction and development of Indian economy immediately after independence. 2.  Objectives Objectives of IBRD are:- 1.   To achieve economic development of countries. 2.   To undertake reconstruction of countries. ...

World Depression of 1929 cancelled the gold standard It resulted in difficulties in World Trade, Exchange of Money and the Investment at the international level. The second     World War badly affected financial position of those countries involved in the War. In order to improve the financial position and the smooth settlement of financial transaction, economic co-operation was essential. There was a need of the Central Bank of the Central Banks. This kind of institutions was established in the form of the IMF. ➤ 1. Establishment Experts  from U.S.K., U. K. and other countries discussed at a length the issue of international economic co-operation. The outcome of this discussion was the United Nation Monetary and Financial Conference at Bretton Wood, New Hampshire, U.S.A. the conference was organized on 1s t  July 1944 to 22nd 1944. The representative of the 44 countries attended the conference. It completed the final draft of article of agreement of the IMF and th...

1. Liquidity Provision  The main function of the financial system is the Provision of money and monetary assets for the Production of goods and services. There should not be any shortage of money for productive ventures. In financial language, the money and monetary assets are referred to as liquidity. The term liquidity refers to cash or money and other assets which can be converted into cash readily without loss of values. So, all activities in a system are related to liquidity- either provision of liquidity or trading in liquidity. In fact in India the R.B.I. has vested with the monopoly power of issuing coins and currency notes. Commercial banks can also create cash [deposit] in the form of  'credit creation' and other financial institutions also deal in monetary assets. Over supply of money is also dangerous to the economy.In India the R.B.I. is the leader of the financial system and hence it has to control the money supply and creation of credit by banks and regulate ...