International Bank for Economic Cooperation
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International Bank for Economic Cooperation
an international bank of the socialist countries, formed to promote economic cooperation, develop the national economies of the member countries, and expand the trade and economic links of member countries with other states. The bank was established on Oct. 22, 1963, by the Agreement on Multilateral Accounts in Transfer Rubles and on the Organization of the International Bank for Economic Cooperation. The members of the bank are Bulgaria, Cuba, Czechoslovakia, the German Democratic Republic, Hungary, Mongolia, Poland, Rumania, and the USSR. The bank is located in Moscow.
The statutory capital of the International Bank for Economic Cooperation was set at 300 million transfer rubles. Subscriptions are paid in transfer rubles and in freely convertible currencies or gold. The capital quotas of the member countries are set on the basis of the volume of their exports in reciprocal trade. The bank also has reserve capital and special funds.
The highest administrative body of the bank is the council, which consists of representatives of all bank member countries. Each country has one vote regardless of the amount of its contribution to bank capital. Decisions are considered adopted when there is complete unanimity among member countries. The executive agency of the bank is the board of directors.
The bank handles multilateral accounts, grants credit for foreign trade, attracts and keeps free capital in transfer rubles, and performs account, credit, deposit, arbitrage, guaranty, and other transactions in transfer rubles, freely convertible currency, the currency of member countries, or gold. It also carries out other banking transactions that are appropriate to its goals and purposes. The bank credits are planned and targeted, and they are granted on a term basis.
The International Bank for Economic Cooperation gives member countries two types of credits in transfer rubles: account credits, for the excess of short-term payments over receipts, and term credits, for expenditures related to specialization and cooperation in production, expansion of commodity turnover, equalization of the balance of payments, seasonal needs, and so on (for terms of one to three years). When commissioned by interested member countries, the bank finances and credits existing joint enterprises and other projects in these countries. The bank charges 2-5 percent for credits and pays 1.5-4 percent interest on deposits.
Accounts in transfer rubles with other countries that are not bank members can also be handled by the bank; the system and conditions for such accounts are determined by the bank council in agreement with the interested countries.
The bank cooperates or participates in organizations whose activity is in line with bank objectives. The bank is authorized to conclude agreements, to open divisions and agencies, and to have representatives. It is responsible for its obligations within the limits of the property belonging to it, but it is not responsible for the obligations of the member countries, just as member countries are not responsible for its obligations.
The basis for the bank’s activity is full equality and respect for the sovereignty of all member countries. The bank is an open organization and may be joined by any country that shares its goals and principles and is ready to assume the obligations arising from the bank agreement and charter. Participation in the bank does not prevent a state from developing direct financial and other ties with other member countries or with outside countries.
The volume of bank operations is steadily growing. The average annual volume of payment turnover among member countries from 1964 to 1972 was 30.8 billion transfer rubles. In 1972, however, the figure was 43.3 billion transfer rubles, almost twice the 1964 figure. Between 1964 and 1972 the bank granted member countries a total of 18 billion transfer rubles worth of credit, including 3 billion in 1972 (which was twice as much as in 1964). Most of the credit investments were in the form of account credits. The share of all credits in the total volume of payments among member countries fluctuated in individual years between 10 and 15 percent. Between 1964 and 1972 the volume of transactions in freely convertible currency and gold was 112.6 billion transfer rubles, including 27.2 billion transfer rubles for 1972. In 1972 the net profit of the International Bank for Economic Cooperation was 13.9 million transfer rubles.
In accord with the Comprehensive Program of Socialist Economic Integration, adopted at the 25th session of the Council for Mutual Economic Assistance in 1971, credits and interest rates will be increasingly directed toward the development of foreign trade and fulfillment of mutual obligations by the countries, the sphere of application of the collective currency (transfer ruble) will be expanded, and bank transactions in freely convertible currencies will continue to be developed.
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