The purchasing power of money depends upon supply and demand

5. You can earn interest ob a current account.
6. Banks lend money to depositors who need capital.
7. The main profits of a bank come from lending money at a fixed rate of 
interest.
8. Money is described as “liquid” because it is compared to flowing water.
9. Legal tender must change hands when we do business and we must see 
it change hands.
UNIT 8 
World Bank
The 
World 
Bank 
is 
the 
world's 
foremost 
intergovernmental organization concerned with the external financing of 
the economic growth of developing countries. The official title of the 
institution is the International Bank for Reconstruction and 
Development 
(IBRD). Before recommending a Bank loan, the staff of the Bank must be 
reasonably satisfied that the productivity of the borrowing country will be 
increased and that the prospects for repayment are good. A country 
must be judged creditworthy. 
Engineering 
investigations 
are 
frequently earned out to determine the probable relation of a proposed 
project to benefits and costs. Increasingly, however, the Bank has shifted 
somewhat away from project lending (e.g., for a dam or a highway or a 
port); it has become concerned with education and other human services, 
the environment, and, through structural adjustment loans, the modification 
of governmental policies that are thought to have impeded long-run 
growth. The Bank has also paid increasing attention to the evaluation of 
previous lending. Recently, moreover, it has acceded to the requests of the 
American secretary of the treasury to help to ease the huge, outstanding» 
largely commercial-bank debt.
Voting power in the Bank (as well as in the Fund), is determined by the
size of each member nation's subscription. Subscriptions, in turn are based
on a formula that takes into account such variables as the value of each 
nation's foreign
trade and its total output. Ultimate power, through weighted voting, rests 
with the Board of Governors of the Bank (and the Fund). The 
governors 
meet annually in September. The day-to-day affairs of the Bank are 
etermined, however, by executive directors who live permanently 'п 
as ington, D.C. They hire a president, who, in turn, hires a staff. By
m

tradition, rather than law, the president of the Bank is an American, usually 
a banker, proposed by the President of the United States.
Because of the size of their subscriptions, five nations— the United 
States, Japan, Germany, the United Kingdom, and France—are entitled to 
appoint executive directors; the remaining seventeen directors are elected 
by some combination of the votes of the other nations. There are 156 
member nations, but, with the independence of the Baltic states and the 
devolution of the Soviet Union into separate republics, the membership 
could increase to over 170, thereby including all the independent nations in 
the world.
The Soviet Union was one of the forty-four governments whose 
representatives signed the original Bretton Woods agreements, but along 
with the other members of the Warsaw Pact, it chose not to join the Bank 
or the Fund when these organizations were formally incorporated in 1946. 
(Poland and Czechoslovakia joined the Bank and the Fund initially but 
withdrew when the cold war began in earnest and a loan to Poland was 
blocked by the United States.

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