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1 1 (January 30, 2020)

handle is hein.crs/govbhvv0001 and id is 1 raw text is: &~ ~ riE SE .$rCh &~ ~ ~ ~d'& 'Vi~b' January 30, 2020 European Bank for Reconstruction and Development (EBRD) The European Bank for Reconstruction and Development (EBRD), the first international financial institution of post- Cold War Europe, was founded in 1991 to ease the path of the former communist countries of Central and Eastern Europe (CEE) and the former Soviet Union from planned to free-market economies. Its geographic area has expanded over time and, today, the EBRD finances projects in 37 countries throughout Europe, the Middle East, and Central Asia. In total, the EBRD has 69 member countries. The United States is a founding member of the EBRD and is the single largest shareholder with a 10% share of the Bank's capital. U.S. membership in the EBRD is authorized by P.L. 101-513, the European Bank for Reconstruction and Development Act (22 U.S.C. §2901 et seq.). On. November 19, 2019, President Trump nominated J. Steven Dowd to be the U.S. Executive Director at the EBRD pending Senate confirmation. His nomination followed the resignation of Judy Shelton, who has been nominated to the Federal Reserve Board. The EBRD is headquartered in London, England. The Bank was originally designed to function differently than other multilateral development banks (MDBs, see text box) in two key ways: first, it was given a political mandate to support democracy; and second, it was designed to support the development of the private sector in the former communist countries. Changes in Europe over the past two decades have softened both mandates. The EBRD President is currently Sir Suma Chakrabarti, of the United Kingdom, first elected in 2012. EBRD member countries re-elected Chakrabarti for a second four-year term in 2016. Since its founding in 1991, the EBRD has been headed by nationals of Germany, France, and the United Kingdom. The EBRD's Board of Governors are to elect a new President to succeed Sir Chakrabarti during the EBRD's 29th annual meeting in London in May 2020. What is a Multilateral Development Bank? The United States is a member of five major MDBs: the World Bank, African Development Bank (AfDB), Asian Development Bank (AsDB), Inter-Amer-ican Development Bank (IADB), and EBRD. MDBs ar-e multilateral development institutions that povide financing for piojects and policy refor-m in low-income and developing countries. MDBs borrow in word capital markets at market rates, but the low rates they pay reflect their high credit-wor-thiness. Because these r-ates ar-e typically lower- than those paid by private bo rower-s, the banks ar-e, in tu n able to relend this money to their bo rowers at lower inteirest rates. The MDBs' main lending windows are self-financing, geneiate net income for the institutions, and subsidize MDB concessional lending to the poor-est count ies. Because the MDBs bor ow to finance their lending, their capital (and hence, incireases in capital) is leveraged, allowing them to lend mo-e than the amount of their capital. Shareholder capital contibutions generally come in two for-ms: paid-in capital, which gene rally r-equires cash payment to the MDB; and callable capital, meaning funds that shaireholders agr-ee to pirovide, but only when necessaiy to avoid a default on a borrowing or- payment under- a guarantee. Two key factor-s distinguish MDBs fr-om private sector- banks: (I) the MDBs' multilater-al shar-eholding structure and preferred creditor status; and (2) capitalization, including callable capital that is generally much highe r than that of commer-cial lenders. This strong capital position facilitates the AAA iating of these institutions. Thus, MDBs can offer loans to developing countri es at rates lower- than many pr ivate banks. Unlike the other MDBs (or the International Monetary Fund, IMF), the EBRD has an explicit political mandate to foster democracies and free-market economies. Article 1 of the EBRD's Articles of Agreements states: In contributing to economic progress and reconstruction, the purpose of the Bank shall be to foster the transition towards open market-oriented economies and to promote private and entrepreneurial initiative in the Central and Eastern European countries committed to and applying the principles of multiparty democracy, pluralism and market economics. In contrast, all of the other major MDBs have Articles asserting their political independence, stating that the MDB shall not interfere in the political affairs of any member; nor shall they be influenced in their decisions by the political character of the member or members concerned. ,,xte, n ,be r hip> The EBRD's Articles of Agreement limit membership to European countries, non-European countries that are members of the IMF, the European Community (EC) (now the European Union (EU)), and the European Investment Bank (EIB). The Articles also require that EC members plus the EC and the EIB hold a majority of the institution's capital stock and a majority of the vote. Currently, EU member states, the EU, and the EIB have a combined control of over 63% of the institution's voting power. EBRD membership has grown in recent years as the Bank has expanded its geographic range. Libya became the EBRD's most recent member in July 2019, marking an expansion of the Bank's presence in the Mediterranean region. Other new members include Egypt, Jordan, Lebanon, Morocco, and Turkey. At the beginning of 2016, China became a member of the EBRD, but has a nominal K~:> gognpo 'pop\qm ggmm g 'S a X

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