Banking & Financial Awareness Quiz: International Financial Institutions: BIS, ADB, AIIB and NDB

The correct answer is B, Basel. The Bank for International Settlements was set up in 1930 at Basel in Switzerland and still works from there, which is why the capital standards drafted under its roof are called the Basel norms. Option A is wrong because Geneva hosts the World Trade Organization, the World Health Organization and the International Labour Organization, but not the BIS. Option C is wrong because Vienna is the seat of the International Atomic Energy Agency and of OPEC, which have nothing to do with banking supervision. Option D is wrong because Frankfurt is the home of the European Central Bank, a central bank of the euro area and itself a member of the BIS, not its host city. Fix Basel with both the BIS and the Basel Committee.

The correct answer is A, 1930. The BIS was founded in 1930, which makes it the oldest international financial institution in the world, older than the Bretton Woods institutions by fourteen years. Option B is wrong because 1944 is the year of the Bretton Woods conference, which led to the International Monetary Fund and the World Bank, both of which began work in 1945 and 1946. Option C is wrong because 1955 marks no founding of this kind in international finance. Option D is wrong because 1974 is the year the Basel Committee on Banking Supervision was created by the central bank governors of the Group of Ten countries, which is hosted by the BIS but is not the BIS itself. Keep 1930 and 1974 apart in your notes.

The correct answer is C, the Basel Committee on Banking Supervision. The committee was created in 1974 by the central bank governors of the Group of Ten countries, sits at the Bank for International Settlements in Basel, and drafts the standards that national regulators then adopt for their own banks. Option A is wrong because the IMF watches balance of payments and exchange rate stability and lends to countries in difficulty; it does not write bank capital standards. Option B is wrong because the Financial Action Task Force, based in Paris, sets standards against money laundering and terrorist financing. Option D is wrong because the World Trade Organization deals with trade rules from Geneva. Remember that the Basel norms become binding only when a central bank such as the Reserve Bank of India adopts them.

The correct answer is B, Manila, Philippines. The Asian Development Bank was established in 1966 and has worked from Manila since then, with field offices in its member countries including India. Option A is wrong because, although Japan holds one of the two largest shares in the bank and its president has by convention been Japanese, Tokyo is not its seat. Option C is wrong because Singapore hosts many regional offices of banks and firms but not the ADB headquarters. Option D is wrong because Jakarta is the seat of the ASEAN Secretariat, which is a different kind of body altogether. For revision, fix Manila with the ADB, Beijing with the AIIB, Shanghai with the New Development Bank and Washington DC with the IMF and the World Bank.

The correct answer is B, 1966. The ADB was established in 1966 to lend for development in Asia and the Pacific, and India was one of its founding members, which is a fact papers like to pair with the year. Option A is wrong because 1956 is associated in Indian banking history with the nationalisation of life insurance and the second five year plan, not with the ADB. Option C is wrong because 1976 is the year the Regional Rural Banks Act came into force in India, a domestic milestone. Option D is wrong because 1986 saw the founding of the Indira Gandhi National Open University and other national bodies, again unrelated. Remember the sequence 1930 for the BIS, 1944 for Bretton Woods, 1966 for the ADB and 2016 for the AIIB.

The correct answer is C, China. The AIIB was proposed by China in 2013 and began operations in January 2016 with its headquarters at Beijing, and China holds the largest share in its capital. Option A is wrong, but only just: India is the second largest shareholder of the AIIB and has been among its largest borrowers, for metro rail, rural roads, power and water supply projects. Option B is wrong because Russia, though a large shareholder, stands below India in the order. Option D is wrong because Japan is not a member of the AIIB at all; Japan and the United States are instead the two largest shareholders of the Asian Development Bank. Hold the pair China first and India second for the AIIB.

The correct answer is D, 2016. The bank opened for business in January 2016 at Beijing, after its articles of agreement had been signed and ratified by the founding members. Option A is wrong because 2013 is the year China proposed the bank, which is the proposal and not the start of operations. Option B is wrong because 2014 is the year the BRICS countries agreed to set up the New Development Bank at the Fortaleza summit, and the year the AIIB memorandum was signed, but not the year it began lending. Option C is wrong because 2015 is the year the New Development Bank began work, which is a neighbouring fact often swapped with this one. Keep 2015 for the NDB and 2016 for the AIIB.

The correct answer is A, Shanghai. The New Development Bank works from Shanghai in China, a decision taken when the bank was being set up, in return for which the first regional centre was given to another member. Option B is wrong because Beijing is the seat of the Asian Infrastructure Investment Bank, and the two banks are commonly confused for that reason. Option C is wrong because India, although a founding member with an equal share and the first presidency, did not get the headquarters. Option D is wrong because Johannesburg in South Africa hosts the Africa Regional Centre of the bank, which is its first regional office but not its headquarters. Remember Shanghai for the NDB and Johannesburg for its African arm. Papers also ask for its first regional office, which is the Africa Regional Centre at Johannesburg.

The correct answer is B, the Fortaleza summit in Brazil. The sixth BRICS summit was held at Fortaleza in July 2014, and the agreement establishing the New Development Bank was signed there, along with the treaty for the Contingent Reserve Arrangement. Option A is wrong because the Durban summit of 2013 only asked for the idea of a development bank to be worked out further, without signing it into being. Option C is wrong because the Ufa summit of 2015 followed the founding and reviewed the bank's start of work. Option D is wrong because the Goa summit of 2016 is remembered for the declaration on terrorism and for the BRICS and BIMSTEC outreach. Fix Fortaleza and 2014 with the NDB. Note also that the same declaration named the first president and the first regional centre of the bank.

The correct answer is B, K. V. Kamath. The first presidency of the New Development Bank went to India, and K. V. Kamath, formerly of ICICI Bank, took charge when the bank began work in 2015, the presidency afterwards rotating among the member countries. Option A is wrong because Jin Liqun of China was the first president of the Asian Infrastructure Investment Bank, a neighbouring fact that is often swapped with this one. Option C is wrong because Raghuram Rajan was Governor of the Reserve Bank of India and before that chief economist of the International Monetary Fund. Option D is wrong because Montek Singh Ahluwalia served as deputy chairman of the Planning Commission. Keep Kamath with the NDB and Jin Liqun with the AIIB.

The correct answer is C, 100 billion US dollars. The Contingent Reserve Arrangement was agreed at the Fortaleza summit of 2014 as a pool of 100 billion dollars on which a member facing short term pressure on its balance of payments may draw, so that it works for the BRICS group somewhat as the International Monetary Fund does for the world. Option A is wrong because 50 billion dollars was the initial subscribed capital of the New Development Bank itself, which is a different figure and a different purpose. Option B is wrong because no arrangement of this group is of that size. Option D is wrong because the authorised capital of the New Development Bank is 100 billion dollars, not 200 billion. Note that the bank lends for projects while the arrangement supports currencies.

The correct answer is B, Washington DC. Both institutions were planned at the Bretton Woods conference of 1944 in the United States and both work from Washington DC, which is why they are called the Bretton Woods twins; the IMF looks after exchange stability and balance of payments while the World Bank lends for development. Option A is wrong because New York is the seat of the United Nations headquarters and of the stock exchange, not of these two. Option C is wrong because London hosts the European Bank for Reconstruction and Development, of which India became a shareholder in 2018. Option D is wrong because Paris is the seat of the Organisation for Economic Co-operation and Development and of the Financial Action Task Force. Keep the cities tied to the right institutions.