Thursday, 30 January 2014

What is the World Bank?

If you’re hoping to succeed in financial trading, there are several financial institutions you need to be familiar with. One of these is the World Bank. Saying this, what is the World Bank and what relevance does it have to financial trading?

The World Bank is a global financial institution that engages in the practice of providing loans to developing countries for capital programmes. These are programmes that involve upgrading the infrastructure of society or business.

These programmes are essential to aiding in the development of emerging economies. This ties in with the goal, that according to the World Banks official website, it has set for itself. This goal is to reduce poverty internationally.

Specifically the World Bank has a range of low-interest loans, interest free credit options and grants that they provide aid to emerging economies to tackle the issue of poverty. The types of programmes these cover are numerous and cover areas such as business, environment, gender equality, combating HIV/AIDS, education, economy and culture.

The World Bank itself is one of a number of financial and humanitarian institutions under the leadership and governance of the United Nations. This means that it sits above the business world and is staffed by representatives from member states. Member states also fund the World Bank; however it also receives its funding from other avenues, such as bond issuance's.

So why do you need to know about the World Bank when engaging in financial trading? The answer to this lies in the role the World Bank plays in aiding the economic developed of emerging markets.

The World Bank helps these countries grow. It provides the capital they need to develop, to strengthen their production capability etc. Logically then the activities of the World Bank can be used to determine which emerging economy is the one to watch. 

Say for example it provides funds to Mexico to grow its car manufacturing industry. Mexico’s car manufacturing industry is already growing, already one to watch. The news of extra funds may indicate you should pay more attention to it, as well as the companies involved. 

Consequently the activities of the World Bank can indicate which economies you don’t want to get involved in. Take Argentina. Ever since their 2002 economic crash they’ve struggled getting financial assistance from the World Bank. This is a further indicator to avoid Argentina at the moment if you wish to be successful in financial trading.

At the Academy of Financial Trading we realise that in order to be successful in financial trading you have to know about certain financial institutions. We seek to ensure that you are fully equipped with this knowledge, ready to use it to your advantage when you start trading.

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