World bank notes

World bank notes DEFAULT


Form of physical currency made of paper, cotton or polymer

A banknote (often known as a bill (in the US and Canada), paper money, or simply a note) is a type of negotiablepromissory note, made by a bank or other licensed authority, payable to the bearer on demand. Banknotes were originally issued by commercial banks, which were legally required to redeem the notes for legal tender (usually gold or silver coin) when presented to the chief cashier of the originating bank. These commercial banknotes only traded at face value in the market served by the issuing bank. Commercial banknotes have primarily been replaced by national banknotes issued by central banks or monetary authorities.

National banknotes are often – but not always – legal tender, meaning that courts of law are required to recognize them as satisfactory payment of money debts.[2] Historically, banks sought to ensure that they could always pay customers in coins when they presented banknotes for payment. This practice of "backing" notes with something of substance is the basis for the history of central banks backing their currencies in gold or silver. Today, most national currencies have no backing in precious metals or commodities and have value only by fiat. With the exception of non-circulating high-value or precious metal issues, coins are used for lower valued monetary units, while banknotes are used for higher values.

Code of Hammurabi Law (c. – BC) stipulated repayment of a loan by a debtor to a creditor on a schedule with a maturity date specified in writtencontractual terms.[3][4][5] Law stipulated that a depositor of gold, silver, or other chattel/movable property for safekeeping must present all articles and a signed contract of bailment to a notary before depositing the articles with a banker, and Law stipulated that a banker was discharged of any liability from a contract of bailment if the notary denied the existence of the contract. Law stipulated that a depositor with a notarized contract of bailment was entitled to redeem the entire value of their deposit, and Law stipulated that a banker was liable for replacement of deposits stolen while in their possession.[6][7][5]

In China during the Han dynasty, promissory notes appeared in BC and were made of leather.[8]Rome may have used a durable lightweight substance as promissory notes in 57 AD which have been found in London.[9] However, Carthage was purported to have issued bank notes on parchment or leather before BC. Hence Carthage may be the oldest user of lightweight promissory notes.[10][11][12] The first known banknote was first developed in China during the Tang and Song dynasties, starting in the 7th century. Its roots were in merchant receipts of deposit during the Tang dynasty (–), as merchants and wholesalers desired to avoid the heavy bulk of copper coinage in large commercial transactions. During the Yuan dynasty (–), banknotes were adopted by the Mongol Empire. In Europe, the concept of banknotes was first introduced during the 13th century by travelers such as Marco Polo,[16][17] with European banknotes appearing in in Sweden.

Counterfeiting, the forgery of banknotes, is an inherent challenge in issuing currency. It is countered by anticounterfeiting measures in the printing of banknotes. Fighting the counterfeiting of banknotes and cheques has been a principal driver of security printing methods development in recent centuries.


Main article: History of money

Paper currency first developed in Tang dynastyChina during the 7th century, although true paper money did not appear until the 11th century, during the Song dynasty. The usage of paper currency later spread throughout the Mongol Empire or Yuan dynasty China. European explorers like Marco Polo introduced the concept in Europe during the 13th century.[16][17]Napoleon issued paper banknotes in the early s.[18] Cash paper money originated as receipts for value held on account "value received", and should not be conflated with promissory "sight bills" which were issued with a promise to convert at a later date.

The perception of banknotes as money has evolved over time. Originally, money was based on precious metals. Banknotes were seen by some as an I.O.U. or promissory note: a promise to pay someone in precious metal on presentation (see representative money). But they were readily accepted - for convenience and security - in London, for example, from the late s onwards. With the removal of precious metals from the monetary system, banknotes evolved into pure fiat money.

Early Chinese paper money[edit]

See also: List of Chinese inventions, Economy of the Song dynasty, and Jiaozi (currency)

Song Dynasty Jiaozi, the world's earliest paper money.
A Yuan dynasty printing plate and banknote with Chinese words.

The first banknote-type instrument was used in China in the 7th century, during the Tang dynasty (–). Merchants would issue what are today called promissory notes in the form of receipts of deposit to wholesalers to avoid using the heavy bulk of copper coinage in large commercial transactions. Before the use of these notes, the Chinese used coins that were circular, with a rectangular hole in the middle. Coins could be strung together on a rope. Merchants, if they were rich enough, found that the strings were too heavy to carry around easily, especially for large transactions. To solve this problem, coins could be left with a trusted person, with the merchant being given a slip of paper (the receipt) recording how much money they had deposited with that person. When they returned with the paper to that person, their coins would be returned.

True paper money, called "jiaozi", developed from these promissory notes by the 11th century, during the Song dynasty.[20][21] By , the Song government was short of copper for striking coins, and issued the first generally circulating notes. These notes were a promise by the ruler to redeem them later for some other object of value, usually specie. The issue of credit notes was often for a limited duration, and at some discount to the promised amount later. The jiaozi did not replace coins but was used alongside them.

The central government soon observed the economic advantages of printing paper money, issuing a monopoly for the issue of these certificates of deposit to several deposit shops. By the early 12th century, the amount of banknotes issued in a single year amounted to an annual rate of 26&#;million strings of cash coins. By the s the central government started to produce its own state-issued paper money (using woodblock printing).

Even before this point, the Song government was amassing large amounts of paper tribute. It was recorded that each year before , the prefecture of Xin'an (modern Shexian, Anhui) alone would send 1,, sheets of paper in seven different varieties to the capital at Kaifeng. In , the Emperor Huizong of Song decided to lessen the amount of paper taken in the tribute quota, because it was causing detrimental effects and creating heavy burdens on the people of the region. However, the government still needed masses of paper product for the exchange certificates and the state's new issuing of paper money. For the printing of paper money alone, the Song government established several government-run factories in the cities of Huizhou,[which?]Chengdu, Hangzhou, and Anqi.

The workforce employed in these paper money factories was quite large; it was recorded in that the factory at Hangzhou alone employed more than a thousand workers a day. However, the government issues of paper money were not yet nationwide standards of currency at that point; issues of banknotes were limited to regional areas of the empire, and were valid for use only in a designated and temporary limit of three years.

The geographic limitation changed between and , when the late southern Song government issued a nationwide paper currency standard, which was backed by gold or silver. The range of varying values for these banknotes was perhaps from one string of cash to one hundred at the most. Ever after , the government printed money in no less than six ink colors and printed notes with intricate designs and sometimes even with mixture of a unique fiber in the paper to combat counterfeiting.

The founder of the Yuan dynasty, Kublai Khan, issued paper money known as Jiaochao. The original notes were restricted by area and duration, as in the Song dynasty, but in the later years, facing massive shortages of specie to fund their rule, the paper money began to be issued without restrictions on duration. Venetian merchants were impressed by the fact that the Chinese paper money was guaranteed by the State.

European explorers and merchants[edit]

According to a travelogue of a visit to Prague in by Ibrahim ibn Yaqub, small pieces of cloth were used as a means of trade, with these cloths having a set exchange rate versus silver.[24]

Around , the Knights Templar would issue notes to pilgrims. Pilgrims would deposit valuables with a local Templar preceptory before embarking for the Holy Land and receive a document indicating the value of their deposit. They would then use that document upon arrival in the Holy Land to receive funds from the treasury of equal value.[25][26]

In the 13th century, Chinese paper money of Mongol Yuan became known in Europe through the accounts of travelers, such as Marco Polo and William of Rubruck.[16][27] Marco Polo's account of paper money during the Yuan dynasty is the subject of a chapter of his book, The Travels of Marco Polo, titled "How the Great Kaan Causeth the Bark of Trees, Made into Something Like Paper, to Pass for Money All Over his Country."[17]

All these pieces of paper are, issued with as much solemnity and authority as if they were of pure gold or silver with these pieces of paper, made as I have described, Kublai Khan causes all payments on his own account to be made; and he makes them to pass current universally over all his kingdoms and provinces and territories, and whithersoever his power and sovereignty extends and indeed everybody takes them readily, for wheresoever a person may go throughout the Great Kaan's dominions he shall find these pieces of paper current, and shall be able to transact all sales and purchases of goods by means of them just as well as if they were coins of pure gold

—&#;Marco Polo, The Travels of Marco Polo

In medievalItaly and Flanders, because of the insecurity and impracticality of transporting large sums of cash over long distances, money traders started using promissory notes. In the beginning these were personally registered, but they soon became a written order to pay the amount to whoever had it in their possession. These notes are seen as a predecessor to regular banknotes by some but are mainly thought of as proto bills of exchange and cheques.[28] The term "bank note" comes from the notes of the bank ("nota di banco") and dates from the 14th century; it originally recognized the right of the holder of the note to collect the precious metal (usually gold or silver) deposited with a banker (via a currency account). In the 14th century, it was used in every part of Europe and in Italian city-state merchants colonies outside of Europe. For international payments, the more efficient and sophisticated bill of exchange ("lettera di cambio"), that is, a promissory note based on a virtual currency account (usually a coin no longer physically existing), was used more often. All physical currencies were physically related to this virtual currency; this instrument also served as credit.

Birth of European banknotes[edit]

The shift toward the use of these receipts as a means of payment took place in the midth century, as the price revolution, when relatively rapid gold inflation was causing a re-assessment of how money worked. The goldsmith bankers of London began to give out the receipts as payable to the bearer of the document rather than the original depositor. This meant that the note could be used as currency based on the security of the goldsmith, not the account holder of the goldsmith-banker.[30] The bankers also began issuing a greater value of notes than the total value of their physical reserves in the form of loans, on the assumption that they would not have to redeem all of their issued banknotes at the same time. This pivotal shift changed the simple promissory note into an agency for the expansion of the monetary supply itself. As these receipts were increasingly used in the money circulation system, depositors began to ask for multiple receipts to be made out in smaller, fixed denominations for use as money. The receipts soon became a written order to pay the amount to whoever had possession of the note. These notes are credited as the first modern banknotes.[28][31]

The first short-lived attempt at issuing banknotes by a central bank was in by Stockholms Banco, a predecessor of Sweden's central bank Sveriges Riksbank.[32] These replaced the copper-plates being used instead as a means of payment.[33] This banknote issue was brought about by the peculiar circumstances of the Swedish coin supply. Cheap foreign imports of copper had forced the Crown to steadily increase the size of the copper coinage to maintain its value relative to silver. The heavy weight of the new coins encouraged merchants to deposit it in exchange for receipts. These became banknotes when the manager of the Bank decoupled the rate of note issue from the bank currency reserves. Three years later, the bank went bankrupt, after rapidly increasing the artificial money supply through the large-scale printing of paper money. A new bank, the Riksens Ständers Bank was established in , but did not issue banknotes until the 19th century.[34]

Permanent issue of banknotes[edit]

The sealing of the Bank of EnglandCharter (). The Bank began the first permanent issue of banknotes a year later.

The modern banknote rests on the assumption that money is determined by a social and legal consensus. A gold coin's value is simply a reflection of the supply and demand mechanism of a society exchanging goods in a free market, as opposed to stemming from any intrinsic property of the metal. By the late 17th century, this new conceptual outlook helped to stimulate the issue of banknotes. The economist Nicholas Barbon wrote that money "was an imaginary value made by a law for the convenience of exchange."[35] A temporary experiment of banknote issue was carried out by Sir William Phips as the Governor of the Province of Massachusetts Bay in to help fund the war effort against France.[36]

The first bank to initiate the permanent issue of banknotes was the Bank of England. Established in to raise money for the funding of the war against France, the bank began issuing notes in with the promise to pay the bearer the value of the note on demand. They were initially handwritten to a precise amount and issued on deposit or as a loan. There was a gradual move toward the issuance of fixed denomination notes, and by , standardized printed notes ranging from £20 to £1, were being printed. Fully printed notes that did not require the name of the payee and the cashier's signature first appeared in [37]

The Scottish economist John Law helped establish banknotes as a formal currency in France, after the wars waged by Louis XIV left the country with a shortage of precious metals for coinage.

In the United States there were early attempts at establishing a central bank in and , but it was only in that the federal government of the United States began to print banknotes.

Central bank issuance of legal tender[edit]

Originally, the banknote was simply a promise to the bearer that they could redeem it for its value in specie, but in the second in a series of Bank Charter Acts established that banknotes would be considered as legal tender during peacetime.[38]

Until the mid-nineteenth century, commercial banks were able to issue their own banknotes, and notes issued by provincial banking companies were the common form of currency throughout England, outside London.[39] The Bank Charter Act of , which established the modern central bank,[40] restricted authorisation to issue new banknotes to the Bank of England, which would henceforth have sole control of the money supply in At the same time, the Bank of England was restricted to issue new banknotes only if they were % backed by gold or up to £14&#;million in government debt. The Act gave the Bank of England an effective monopoly over the note issue from [41][42]

Issue of banknotes[edit]

Collage for banknote design with annotations and additions to show proposed changes (figure rather higher so as to allow room for the No.), Bank of Manchester, UK, On display at the British Museum in London

Generally, a central bank or treasury is solely responsible within a state or currency union for the issue of banknotes. However, this is not always the case, and historically the paper currency of countries was often handled entirely by private banks. Thus, many different banks or institutions may have issued banknotes in a given country. Commercial banks in the United States had legally issued banknotes before there was a national currency; however, these became subject to government authorization from to In the last of these series, the issuing bank would stamp its name and promise to pay, along with the signatures of its president and cashier on a preprinted note. By this time, the notes were standardized in appearance and not too different from Federal Reserve Notes.

A$5 note issued by Citizens Bank of Louisiana in the s.

In a small number of countries, private banknote issue continues to this day. For example, by virtue of the complex constitutional setup in the United Kingdom, certain commercial banks in two of the state's four constituent countries (Scotland and Northern Ireland) continue to print their own banknotes for domestic circulation, even though they are not fiat money or declared in law as legal tender anywhere. The UK's central bank, the Bank of England, prints notes which are legal tender in England and Wales; these notes are also usable as money (but not legal tender) in the rest of the UK (see Banknotes of the pound sterling).

In the two Special Administrative Regions of the People's Republic of China, arrangements are similar to those in the UK; in Hong Kong, three commercial banks are licensed to issue Hong Kong dollar notes,[43] and in Macau, banknotes of the Macanese pataca are issued by two different commercial banks. In Luxembourg, the Banque Internationale à Luxembourg was entitled to issue its own Luxembourgish franc notes until the introduction of the Euro in [44]

As well as commercial issuers, other organizations may have note-issuing powers; for example, until the Singapore dollar was issued by the Board of Commissioners of Currency Singapore, a government agency which was later taken over by the Monetary Authority of Singapore.[43]

As with any printing, there is also a chance for banknotes to have printing errors. For U.S. banknotes, these errors can include board break errors, butterfly fold errors, cutting errors, dual denomination errors, fold over errors, and misalignment errors.[45]

Advantages and disadvantages[edit]

When Brazil changed currencies in , the , , and 10, cruzadosbanknotes were overstamped and issued as 1, 5, and 10 cruzados novosbanknotes for several months before cruzado novo banknotes were printed and issued. Banknotes can be overstamped with new denominations, typically when a country converts to a new currency at an even, fixed exchange rate (in this case, ).

Prior to the introduction of banknotes, precious or semiprecious metals minted into coins to certify their substance were widely used as a medium of exchange. The value that people attributed to coins was originally based upon the value of the metal unless they were token issues or had been debased. Banknotes were originally a claim for the coins held by the bank, but due to the ease with which they could be transferred and the confidence that people had in the capacity of the bank to settle the notes in coin if presented, they became a popular means of exchange in their own right. They now make up a very small proportion of the "money" that people think that they have as demand deposit bank accounts and electronic payments have negated the need to carry notes and coins.

Banknotes have a natural advantage over coins in that they are lighter to carry, but they are also less durable than coins. Banknotes issued by commercial banks had counterparty risk, meaning that the bank may not be able to make payment when the note was presented. Notes issued by central banks had a theoretical risk when they were backed by gold and silver. Both banknotes and coins are subject to inflation. The durability of coins means that even if metal coins melt in a fire or are submerged under the sea for hundreds of years they still have some value when they are recovered. Gold coins salvaged from shipwrecks retain almost all of their original appearance, but silver coins slowly corrode.[46][47]

Other costs of using bearer money include:

  1. Discounting to face value: Before national currencies and efficient clearing houses, banknotes were only redeemable at face value at the issuing bank. Even a branch bank could discount notes of other branches of the same bank. The discounts usually increased with distance from the issuing bank. The discount also depended on the perceived safety of the bank. When banks failed, the notes were usually partly redeemed out of reserves, but sometimes became worthless.[49] The problem of discounting within a country does not exist with national currencies; however, under floating exchange rates currencies are valued relative to one another in the foreign exchange market.
  2. Counterfeiting paper notes has always been a problem, especially since the introduction of color photocopiers and computer image scanners. Numerous banks and nations have incorporated many types of countermeasures in order to keep the money secure. However, extremely sophisticated counterfeit notes known as superdollars have been detected in recent years.
  3. Manufacturing or issue costs. Coins are produced by industrial manufacturing methods that process the precious or semi-precious metals, and require additions of alloy for hardness and wear resistance. By contrast, bank notes are printed paper (or polymer), and typically have a higher cost of issue, especially in larger denominations, compared with coins of the same value.
  4. Wear costs. Banknotes don't lose economic value by wear, since, even if they are in poor condition, they are still a legally valid claim on the issuing bank. However, banks of issue do have to pay the cost of replacing banknotes in poor condition, and paper notes wear out much faster than coins.
  5. Cost of transport. Coins can be expensive to transport for high value transactions, but banknotes can be issued in large denominations that are lighter than the equivalent value in coins.
  6. Cost of acceptance. Coins can be checked for authenticity by weighing and other forms of examination and testing. These costs can be significant, but good quality coin design and manufacturing can help reduce these costs. Banknotes also have an acceptance cost – the expense of checking the banknote's security features and confirming acceptability of the issuing bank.

The different advantages and disadvantages of coins and banknotes imply that there may be an ongoing role for both forms of bearer money, each being used where its advantages outweigh its disadvantages.

Materials used for banknotes[edit]

Paper banknotes[edit]

Obverse and reverse of an old American $ note ()

Most banknotes are made from cotton paper with a weight of 80 to 90&#;grams per square meter. The cotton is sometimes mixed with linen, abaca, or other textile fibres. Generally, the paper used is different from ordinary paper: it is much more resilient, resists wear and tear (the average life of a banknote is two years),[50] and also does not contain the usual agents that make ordinary paper glow slightly under ultraviolet light. Unlike most printing and writing paper, banknote paper is infused with polyvinyl alcohol or gelatin, instead of water, to give it extra strength. Early Chinese banknotes were printed on paper made of mulberry bark. Mitsumata (Edgeworthia chrysantha) and other fibers are used in Japanese banknote paper[51] (a kind of Washi).

Most banknotes are made using the mould made process in which a watermark and thread is incorporated during the paper forming process. The thread is a simple looking security component found in most banknotes. It is however often rather complex in construction comprising fluorescent, magnetic, metallic and micro print elements. By combining it with watermarking technology the thread can be made to surface periodically on one side only. This is known as windowed thread and further increases the counterfeit resistance of the banknote paper. This process was invented by Portals, part of the De La Rue group in the UK. Other related methods include watermarking to reduce the number of corner folds by strengthening this part of the note. Varnishing and coatings reduce the accumulation of dirt on the note for longer durability in circulation.

Another security feature is based on windows in the paper which are covered by holographic foils to make it very hard to copy. Such technology is applied as a portrait window for the higher denominations of the Europa series (ES2) of the euro banknotes.[52] Windows are also used with the Hybrid substrate from Giesecke+Devrient which is composed of an inner layer of paper substrate with thin outer layers of plastic film for high durability.[53]

History of counterfeiting and security measures[edit]

When paper bank notes were first introduced in England, they resulted in a dramatic rise in counterfeiting.[citation needed] The attempts by the Bank of England and the Royal Mint to stamp out currency crime led to new policing strategies, including the increased use of entrapment.[54]

The characteristics of banknotes, their materials and production techniques (as well as their development over history) are topics that normally aren't thoroughly examined by historians, even though now there are a number of works detailing how bank notes were actually constructed. This is mostly due to the fact that historians prioritize the theoretical understanding of how money worked rather than how it was produced.[55] The first great deterrent against counterfeiting was the death penalty for forgers, but this wasn't enough to stop the rise of counterfeiting. Over the eighteenth century, far fewer banknotes were circulating in England compared to the boom of bank notes in the nineteenth century; because of this, improving note-making techniques wasn't considered a compelling issue.

In the eighteenth century, banknotes were produced mainly through copper-plate engraving and printing and they were single-sided. Notes making technologies remained basically the same during the eighteenth century[56] The first banknotes were produced through the so-called intaglio printing, a technique that consisted of engraving a copper plate by hand and then covering it in ink to print the bank notes. Only with this technique it was possible, at that time, to force the paper into the lines of the engraving and to make suitable banknotes. Another factor that made it harder to counterfeit banknotes was the paper, since the type of paper used for banknotes was rather different from the paper commercially available at that time. Despite this, some forgers managed to successfully forge notes by getting involved with and consulting paper makers, in order to make a similar kind of paper by themselves.[57] Furthermore, watermarked paper was also used since banknotes first appeared; it involved the sewing of a thin wire frame into paper mould. Watermarks for notes were first used in by a Berkshire paper maker whose name was Rice Watkins.[57] Watermarks, together with a special paper type, were supposed to make it harder and more expensive to forge banknotes, since more complex and expensive paper making machines were needed in order to make them.

At the beginning of the nineteenth century (the so-called Bank Restriction Period, ), the dramatically increased demand of bank notes slowly forced the banks to refine the technologies employed.[57] In , watermarks, which previously were straight lines, became wavy, thanks to the idea of a watermark mould maker whose name was William Brewer. This made even harder the counterfeiting of bank notes, at least in the short term, since in the number of forged bank notes fell to just , compared to of the previous year[58] In the same period, bank notes also started to become double-sided and with more complex patterns, and banks asked skilled engravers and artists to help them make their notes harder to counterfeit (episode labelled by historians as "the search for the inimitable banknote").[59]

The ease with which paper money can be created, by both legitimate authorities and counterfeiters, has led both to a temptation in times of crisis such as war or revolution to produce paper money which was not supported by precious metal or other goods, thus leading to Hyperinflation and a loss of faith in the value of paper money, e.g. the Continental Currency produced by the Continental Congress during the American Revolution, the Assignats produced during the French Revolution, the paper currency produced by the Confederate States of America and the individual states of the Confederate States of America, the financing of World War I by the Central Powers (by 1 gold Austro-Hungarian krone of was worth 14, paper Kronen), the devaluation of the Yugoslav Dinar in the s, etc. Banknotes may also be overprinted to reflect political changes that occur faster than new currency can be printed.

In , Austria produced the Schilling banknote (Mozart), which is the first foil application (Kinegram) to a paper banknote in the history of banknote printing. The application of optical features is now in common use throughout the world. Many countries' banknotes now have embedded holograms.

Polymer banknotes[edit]

Main article: Polymer banknote

In , Costa Rica and Haiti issued the first Tyvek and the Isle of Man issued the first Bradvek polymer (or plastic) banknotes; these were printed by the American Banknote Company and developed by DuPont. These early plastic notes were plagued with issues such as ink wearing off and were discontinued. In , after significant research and development in Australia by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and the Reserve Bank of Australia, Australia produced the first polymer banknote made from biaxially-oriented polypropylene (plastic), and in , it became the first country to have a full set of circulating polymer banknotes of all denominations completely replacing its paper banknotes. Since then, other countries to adopt circulating polymer banknotes include Bangladesh, Brazil, Brunei, Canada, Chile, Guatemala, Dominican Republic, Indonesia, Israel, Malaysia, Mexico, Nepal, New Zealand, Papua New Guinea, Paraguay, Romania, Samoa, Singapore, the Solomon Islands, Thailand, Trinidad and Tobago, the United Kingdom, Uruguay, Vietnam, and Zambia, with other countries issuing commemorative polymer notes, including China, Kuwait, the Northern Bank of Northern Ireland, Taiwan and Hong Kong.[60] Another country indicating plans to issue polymer banknotes is Nigeria.[citation needed] In , Bulgaria issued the world's first hybrid paper-polymer banknote.[citation needed]

Polymer banknotes were developed to improve durability and prevent counterfeiting through incorporated security features, such as optically variable devices that are extremely difficult to reproduce.

Other materials[edit]

Over the years, a number of materials other than paper have been used to print banknotes. This includes various textiles, including silk, and materials such as leather.[62]

Silk and other fibers have been commonly used in the manufacture of various banknote papers, intended to provide both additional durability and security. Crane and Company patented banknote paper with embedded silk threads in and has supplied paper to the United States Treasury since Banknotes printed on pure silk "paper" include "emergency money" Notgeld issues from a number of German towns in during a period of fiscal crisis and hyperinflation. Most notoriously, Bielefeld produced a number of silk, leather, velvet, linen and wood issues. These issues were produced primarily for collectors, rather than for circulation. They are in demand by collectors. Banknotes printed on cloth include a number of Communist Revolutionary issues in China from areas such as Xinjiang, or Sinkiang, in the United Islamic Republic of East Turkestan in Emergency money was also printed in on khaki shirt fabric during the Boer War.

Cotton fibers together with 25% linen is the material of the banknotes in the United States. Leather banknotes (or coins) were issued in a number of sieges, as well as in other times of emergency. During the Russian administration of Alaska, banknotes were printed on sealskin. A number of 19th century issues are known in Germanic and Estonia, including the places of Dorpat, Pernau, Reval, Werro and Woiseck. In addition to the Bielefeld issues, other German leather Notgeld from is known from Borna, Osterwieck, Paderborn and Pößneck.

Other issues from were printed on wood, which was also used in Canada in – during Pontiac's Rebellion, and by the Hudson's Bay Company. In , in Bohemia, wooden checkerboard pieces were used as money.

Even playing cards were used for currency in France in the early 19th century, and in French Canada from until , the Colony of Louisiana, Dutch Guiana, and in the Isle of Man in the beginning of the 19th century, and again in Germany after World War I.

Most recently, Bisphenol S (BPS), has been frequently used in the production of banknotes worldwide. BPS is an endocrine disruptor that is subject to human dermal absorption through handling banknotes.[63]

Vertical orientation[edit]

The Colombian 50, peso note, presented in a vertical format.

Vertical currency is a type of currency in which the orientation has been changed from the conventional horizontal orientation to a vertical orientation. Dowling Duncan, a self-touted multidisciplinary design studio, conducted a study in which they determined people tend to handle and deal with money vertically rather than horizontally, especially when the currency is processed through ATM and other money machines. They also note how money transactions are conducted vertically not horizontally.[64]Bermuda, Cape Verde, Organisation of Eastern Caribbean States, Israel, Switzerland, and Venezuela have adopted vertically oriented currency, although Israel and Cape Verde have now reverted to horizontal orientation.[65]

Since , Sri Lanka has printed the reverse of its banknotes vertically. Between and , Brazil has printed banknotes of and cruzeiros reais and the first Brazilian real series of banknotes has the obverse in traditional horizontal layout, while the reverse is in vertical format. The Hong Kong dollar banknotes series too has the obverse in traditional horizontal layout, while the reverse is in vertical format.[66]

Early Chinese banknotes were also vertical, due to the direction of Chinese writing.

The Canadian $10 bill featuring a portrait of Canadian civil rights pioneer Viola Desmond is presented in a vertical format.[67][68] The Northern Irish £5 and £10 notes issued by Ulster Bank for will also be presented in this way.[69]

Vending machines and banknotes[edit]

In the late 20th century, vending machines were designed to recognize banknotes of the smaller values long after they were designed to recognize coins distinct from slugs.[where?] This capability has become inescapable in economies where inflation has not been followed by introduction of progressively larger coin denominations (such as the United States, where several attempts to make dollar coins popular in general circulation have largely failed). The existing infrastructure of such machines presents one of the difficulties in changing the design of these banknotes to make them less counterfeitable, that is, by adding additional features so easily discernible by people that they would immediately reject banknotes of inferior quality, for every machine in the country would have to be updated.[citation needed]


A 5 euro noteso badly damaged it has been torn in half. The note has later been repaired with tape.

A banknote is removed from circulation because of everyday wear and tear from its handling. Banknotes are passed through a banknote sorting machine for determining authenticity and fitness for circulation, or may be classified unfit for circulation if they are worn, dirty, soiled, damaged, mutilated or torn. Unfit notes are returned to the central bank for secure online destruction by high-speed banknote sorting machines using a cross-cut shredder device similar to a paper shredder with security level P-5 (pieces smaller than 30&#;mm²) according to the standard DIN –2. This small size decomposes a banknote into typically more than tiny pieces and rules out reconstruction like a jigsaw puzzle because the shreds from many banknotes are commingled.

A subsequent briquettor compresses shredded paper material into a small cylindrical or rectangular form for the disposal (e.&#;g. landfill or burning[70]) Before the s, unfit banknotes were destroyed by incineration with a higher risk of manipulations.

When a Federal Reserve Bank of the United States receives a cash deposit from a commercial bank or another financial institution, it checks the individual notes to determine whether they are fit for future circulation.[71] About one-third of the notes that the Fed receives are unfit, and the Fed destroys them. US dollar banknotes last an average of more than five years.[72]

Contaminated banknotes are also decommissioned and removed from circulation, primarily to prevent the spread of diseases. A Canadian government report indicates:

Types of contaminants include: notes found on a corpse, stagnant water, contaminated by human or animal body fluids such as urine, feces, vomit, infectious blood, fine hazardous powders from detonated explosives, dye pack and/or drugs[73]

In the US, the nickname "Fed Shreds" refers to paper money which has been shredded after becoming unfit for circulation. Although these shredded banknotes are generally landfilled, they are sometimes sold or given away in small bags as souvenirs or as briquettes.[74]

Polymer banknotes may be shredded and then melted down and recycled to form plastic products like building components, plumbing fittings, or compost bins.[75]

Intelligent banknote neutralisation systems[edit]

Intelligent banknote neutralisation systems (IBNS) are security systems which render banknotes unusable by marking them permanently as stolen with a degradation agent. Marked (stained) banknotes cannot be brought back into circulation easily and can be linked to the crime scene. Today's most used degradation agent is a special security ink which cannot be removed from the banknote easily and not without destroying the banknote itself, but other agents also exist. Today IBNSs are used to protect banknotes in automated teller machines, retail machines, and during cash-in-transit operations.

Dynamic Intelligent Currency Encryption[edit]

Dynamic Intelligent Currency Encryption (DICE) is a security technology introduced in by British company EDAQS, which devaluates banknotes remotely that are illegal or have been stolen. The technology is based on identifiable banknotes - that could be an RFID chip or a barcode - and connects to a digital security system to verify the validity of the banknote. The company claims that the banknotes are unforgeable and contribute to solve cash-related problems as well as fight crime and terrorism. In another note, the DICE benefits cover and solve almost all cash-related issues that are seen by governments to be a motivation for the progressive abolition of cash.[76][77]

Confiscation and asset forfeiture[edit]

In the United States there are many laws that allow the confiscation of cash and other assets from the bearer if there is suspicion that the money came from an illegal activity.[78] Because a significant amount of U.S. currency contains traces of cocaine and other illegal drugs, it is not uncommon for innocent people searched at airports or stopped for traffic violations to have cash in their possession sniffed by dogs for drugs and then have the cash seized because the dog smelled drugs on the money. It is then up to the owner of the money to prove where the cash came from at his own expense. Many people simply forfeit the money.[79] In , the United States Court of Appeals, Ninth Circuit, held in the case of UNITED STATES of America v. U.S. CURRENCY, $30, (39 F.3d 63 USLW , No. ) that the widespread presence of illegal substances on paper currency in the Los Angeles area created a situation where the reaction of a drug-sniffing dog would not create probable cause for civil forfeiture.[80]

Paper money collecting as a hobby[edit]

Main article: Notaphily

Banknote collecting, or notaphily, is a slowly growing area of numismatics. Although generally not as widespread as coin and stamp collecting, the hobby is slowly expanding. Prior to the s, currency collecting was a relatively small adjunct to coin collecting, but currency auctions and greater public awareness of paper money have caused more interest in rare banknotes and consequently their increased value.[citation needed] The most valuable banknote is the $ bill issued in that was sold at an auction for $2,,


For years, the mode of collecting banknotes was through a handful of mail order dealers who issued price lists and catalogs. In the early s, it became more common for rare notes to be sold at various coin and currency shows via auction. The illustrated catalogs and "event nature" of the auction practice seemed to fuel a sharp rise in overall awareness of paper money in the numismatic community. The emergence of currency third party grading services (similar to services that grade and "slab", or encapsulate, coins) also may have increased collector and investor interest in notes. Entire advanced collections are often sold at one time, and to this day single auctions can generate millions in gross sales. Today, eBay has surpassed auctions in terms of highest volume of sales of banknotes.[81][82][83] However, rare banknotes still sell for much less than comparable rare coins. This disparity is diminishing as paper money prices continue to rise. A few rare and historical banknotes have sold for more than a million dollars.[84]

There are many different organizations and societies around the world for the hobby, including the International Bank Note Society (IBNS), which currently assert to have around 2, members in 90 countries.[85]


The universal appeal and instant recognition of bank notes has resulted in a plethora of novelty merchandise that is designed to have the appearance of paper currency. These items cover nearly every class of product. Cloth material printed with bank note patterns is used for clothing, bed linens, curtains, upholstery and more. Acrylic paperweights and even toilet seats with bank notes embedded inside are also common. Items that resemble stacks of bank notes and can be used as a seat or ottoman are also available.

Manufacturers of these items must take into consideration when creating these products whether the product could be construed as counterfeiting. Overlapping note images and/or changing the dimensions of the reproduction to be at least 50% smaller or 50% larger than the original are some ways to avoid the risk of being considered a counterfeit. But in cases where realism is the goal, other steps may be necessary. For example, in the stack of bank notes seat mentioned earlier, the decal used to create the product would be considered counterfeit. However, once the decal has been affixed to the resin stack shell and cannot be peeled off, the final product is no longer at risk of being classified as counterfeit, even though the resulting appearance is realistic.

See also[edit]

Notes and references[edit]

  1. ^"Legal Tender Guidelines". British Royal Mint. Archived from the original on 17 December Retrieved 2 September
  2. ^Hammurabi (). Translated by Sommer, Otto. "Code of Hammurabi, King of Babylon". Records of the Past. Washington, DC: Records of the Past Exploration Society. 2 (3): Retrieved 20 June
  3. ^Hammurabi (). "Code of Hammurabi, King of Babylon"(PDF). Liberty Fund. Translated by Harper, Robert Francis (2nd&#;ed.). Chicago: University of Chicago Press. p.&#; Retrieved 20 June
  4. ^ abHammurabi (). "Code of Hammurabi, King of Babylon". Avalon Project. Translated by King, Leonard William. New Haven, CT: Yale Law School. Retrieved 20 June
  5. ^Hammurabi (). Translated by Sommer, Otto. "Code of Hammurabi, King of Babylon". Records of the Past. Washington, DC: Records of the Past Exploration Society. 2 (3): Retrieved 20 June
  6. ^Hammurabi (). "Code of Hammurabi, King of Babylon"(PDF). Liberty Fund. Translated by Harper, Robert Francis (2nd&#;ed.). Chicago: University of Chicago Press. p.&#; Retrieved 20 June
  7. ^"NOVA - The History of Money".
  8. ^"Ancient Roman IOUs Found Beneath Bloomberg's New London HQ". 1 June Retrieved 9 June
  9. ^Jones, John Percival (). Speeches of J.P. Jones: Money and Tariff, .
  10. ^Moulton, Luther Vanhorn (). The Science of Money and American Finances. Co-operative Press. p.&#;
  11. ^Wells, H. G. (). The outline of history, being a plain history of life and mankind. New York: The Macmillan Company.
  12. ^ abcWilliam N. Goetzmann; K. Geert Rouwenhorst (1 August ). The Origins of Value: The Financial Innovations that Created Modern Capital Markets. Oxford University Press. p.&#; ISBN&#;.
  13. ^ abcMarco Polo (). The Travels of Marco Polo, a Venetian, in the Thirteenth Century: Being a Description, by that Early Traveller, of Remarkable Places and Things, in the Eastern Parts of the World. pp.&#;– Retrieved 19 September
  14. ^"Chapter Security Printing and Seals"(PDF). Security Engineering: A Guide to Building Dependable Distributed Systems. p.&#;
  15. ^Peter Bernholz (). Monetary Regimes and Inflation: History, Economic and Political Relationships. Edward Elgar Publishing. p.&#; ISBN&#;.
  16. ^Daniel R. Headrick (1 April ). Technology: A World History. Oxford University Press. p.&#; ISBN&#;.
  17. ^Jankowiak, Marek. Dirhams for slaves. Medieval Seminar, All Souls, , p.8
  18. ^Sarnowsky, Jürgen (). Templar Order. doi/_rpp_com_ ISBN&#;.
  19. ^Martin, Sean (). The Knights Templar: The History and Myths of the Legendary Military Order (1st&#;ed.). New York: Thunder's Mouth Press. ISBN&#;. OCLC&#;
  20. ^Moshenskyi, Sergii (). History of the weksel: Bill of exchange and promissory note. p.&#; ISBN&#;.
  21. ^ abDe Geschiedenis van het Geld (the History of Money), , Teleac, page 96
  22. ^"Sverige, Palmstruchska banken, Kreditsedel 10 daler silvermynt, 17 april " [Europe's first banknotes]. Alvin (in Swedish).
  23. ^Faure AP (6 April ). "Money Creation: Genesis 2: Goldsmith-Bankers and Bank Notes". Social Science Research Network. SSRN&#;
  24. ^Vincent Lannoye (). The History of Money for Understanding Economics. Vincent Lannoye. p.&#; ISBN&#;.
  25. ^Geisst, Charles R. (). Encyclopedia of American business history. New York. p.&#; ISBN&#;.
  26. ^
  27. ^"The first European banknote". Cité de l’économie et de la monnaie.
  28. ^Nicholas Barbon, Discourse on Trade, p
  29. ^Patrick Dillon (). The Last Revolution: and the Creation of the Modern World. Random House. pp.&#;– ISBN&#;.
  30. ^"A brief history of banknotes". Bank of England. Archived from the original on 29 September Retrieved 17 December
  31. ^"Currency and Bank Notes Act, "(PDF). Retrieved 17 December
  32. ^"£2 note issued by Evans, Jones, Davies & Co". British Museum. Archived from the original on 18 January Retrieved 31 October
  33. ^Capie, Forrest; Fischer, Stanley; Goodhart, Charles; Schnadt, Norbert (). "The development of central banking". The future of central banking: the tercentenary symposium of the Bank of England. Cambridge, UK: Cambridge University Press. ISBN&#;. Retrieved 17 December &#; via LSE Research Online.
  34. ^Jeffrey A. Tucker (16 September ). "Yesterday was a Historic Day". Mises Wire. Mises Institute. Archived from the original on 18 September Retrieved 17 September
  35. ^Horsefield, J. K. (November ). "The Origins of the Bank Charter Act, ". Economica. New. 11 (44): – doi/ JSTOR&#;
  36. ^ abCommittee on Payment and Settlement Systems (August ). "The Role of Central Bank Money in Payment Systems"(PDF). Bank for International Settlements. p.&#; Archived(PDF) from the original on 9 September Retrieved 14 August
  37. ^"BIL's history". Banque Internationale à Luxembourg. Retrieved 13 December
  38. ^"Error Is Human: Part I - PMG". Retrieved 16 April
  39. ^Famous shipwrecks from which valuable precious metals and coins were recovered in recent years include the Atocha and the SS Central America. Shipwreck coins are highly collectible, and dealers post photos on the internet.
  40. ^"Virtual Shipwreck and Hoard Map by Daniel Frank Sedwick, LLC".
  41. ^Taylor, George Rogers (). The Transportation Revolution, –. New York, Toronto: Rinehart & Co. ISBN&#;.
  42. ^"The Banknote Lifecycle – from Design to Destruction". De La Rue. Archived from the original on 13 May
  43. ^"Banknote Production Process". [Japanese] National Printing Bureau. Retrieved 16 April
  44. ^"Security features. Europa series € banknote". European Central Bank. Retrieved 11 July
  45. ^"Hybrid Banknote Substrate". Papierfabrik Louisenthal. Retrieved 11 July
  46. ^Crymble, Adam (). "How Criminal were the Irish? Bias in the Detection of London Currency Crime, ". The London Journal. 43 (1): 36– doi/
  47. ^Mockford, ; pp. quote="Detailed discussion of the material characteristics of Bank Notes, as well as the methods used in their construction, have therefore tended to constitute merely a footnote in historical works that have often prioritised both contemporary and modern theoretical understandings of money and exchange."
  48. ^Mockford, ; p. quote="The technologies employed by the Bank in the making of its notes were ones that altered very little throughout the course of the long eighteenth century, with major changes not occurring until well after the close of this period."
  49. ^ abcMockford, ; pp.
  50. ^Mockford, ; pp.
  51. ^Mockford, ; p.
  52. ^"Our Currency". About Australia. Australian Government. Archived from the original on 7 June Retrieved 19 July
  53. ^Walter Grasser / Albert Pick: Das Bielefelder Stoffgeld - , Berlin (German)
  54. ^S.K. Singh, Bank Regulation, Discovery Publishing House, New Delhi, , pp
  55. ^Liao C; Liu F; Kannan K (). "Bisphenol S, a New Bisphenol Analogue, in Paper Products and Currency Bills and Its Association with Bisphenol A Residues". Environmental Science & Technology. 46 (12): – doi/esn. PMID&#;
  56. ^"Dowling Duncan redesign the US banknotes". Dowling &#; Duncan. 14 August Archived from the original on 23 April Retrieved 15 August
  57. ^"Israel's New Banknotes". Bank of Israel.
  58. ^" New Series Hong Kong Banknotes" (Press release). Hong Kong Monetary Authority. 24 July Retrieved 24 July
  59. ^Brett Bundale (8 March ). "Canada unveils $10 bill featuring civil rights icon Viola Desmond". The Star. Toronto Star Newspapers. Retrieved 16 April
  60. ^"New $10 bank note featuring Viola Desmond unveiled on International Women's Day" (Press release). Bank of Canada. 8 March Retrieved 16 April
  61. ^"Ulster Bank reveals 'vertical' banknotes". The Irish News. 24 May Retrieved 25 May
  62. ^Hungarians burn shredded money to stay warm (Motion picture). Agence France-Presse. .
  63. ^"Fitness Guidelines for Federal Reserve Notes"(PDF). Federal Reserve System Cash Product Office (CPO). 7 February Retrieved 10 July
  64. ^"How Currency Gets into Circulation". Federal Reserve Bank of New York. Retrieved 9 July
  65. ^Trichur, Rita (28 September ). "Bankers wipe out dirty money". Toronto Star. Archived from the original on 16 October Retrieved 28 September

World Bank

What Is the World Bank?

The World Bank is an international organization dedicated to providing financing, advice, and research to developing nations to aid their economic advancement. The bank predominantly acts as an organization that attempts to fight poverty by offering developmental assistance to middle- and low-income countries.

Currently, the World Bank has two stated goals that it aims to achieve by The first is to end extreme poverty by decreasing the number of people living on less than $ a day to below 3% of the world population. The second is to increase overall prosperity by increasing income growth in the bottom 40% of every country in the world.

Key Takeaways

  • The World Bank is an international organization that provides financing, advice, and research to developing nations to help advance their economies.
  • The World Bank and International Monetary Fund (IMF)—founded simultaneously under the Bretton Woods Agreement—both seek to serve international governments.
  • The World Bank has expanded to become known as the World Bank Group with five cooperative organizations, sometimes known as the World Banks.
  • The World Bank Group offers a multitude of proprietary financial assistance, products, and solutions for international governments, as well as a range of research-based thought leadership for the global economy at large.
  • The World Bank's Human Capital Project seeks to help nations invest in and develop their human capital to produce a better society and economy.

Understanding the World Bank

The World Bank is a provider of financial and technical assistance to individual countries around the globe. The bank considers itself a unique financial institution that sets up partnerships to reduce poverty and support economic development.

The World Bank supplies qualifying governments with low-interest loans, zero-interest credits, and grants, all to support the development of individual economies. Debt borrowings and cash infusions help with global education, healthcare, public administration, infrastructure, and private-sector development. The World Bank also shares information with various entities through policy advice, research and analysis, and technical assistance. It offers advice and training for both the public and private sectors.

Examples of What the World Bank Does

The World Bank provides financing, advice, and other resources to developing countries in the areas of education, public safety, health, and other areas of need. Often, nations, organizations, and other institutions partner with the World Bank to sponsor development projects.

Human Capital Project

In , the World Bank created the Human Capital Project, which seeks to help countries invest in and develop their people to be productive citizens and active contributors to their economy. World leaders are urged to prioritize investments in education, healthcare, and social protections, and, in return, they will realize a stronger economy full of healthy, thriving adults.

The Human Capital project outlines how governments should invest in providing quality, affordable childcare to support and improve child development, increase women's access to better employment opportunities, and increase economic growth, to name a few.

To build human capital globally, the World Bank has identified several areas of focus: the Human Capital Index (HCI), measurement and research, and country engagement.

Created in October , the Human Capital Index summarizes a nation's investments in its human capital, specifically concerning health and education. The index is used to identify what is lost from the lack of investments in human capital; it also prompts leaders to think of how to remedy these deficiencies.

Beyond analyzing human capital, the World Bank measures the effectiveness of a nation's educational and healthcare systems. Doing so helps them identify what should be continued and what should be changed. It can also give insight on where to allocate resources.

Country engagement requires a country to take a "whole government" approach to addressing factors that compromise human capital. The nation, its leaders, and influencers band together to champion reducing poverty and increasing shared prosperity.

National Immunization Support Project

In April , the World Bank approved the National Immunization Support Project for Pakistan. This project, costing an estimated $ million, aims to increase the equitable distribution of vaccines to children ages 0 to 23 months.

The project consists of five components that are designed to enhance the country's vaccine distribution to the most vulnerable. The first component creates a governance structure and addresses logistics, monitoring, and evaluation systems. The second component involves performance planning and the alignment of skilled human resources.

The third component increases the awareness of and promotes the program among Pakistan's citizens, as well as addresses how their schools' curriculum aligns with this initiative. The fourth component makes it possible to obtain the necessary equipment to widely distribute vaccines and increase the supply chain for vaccines. Lastly, the fifth component includes being able to expand the program's reach and enhance research and development in this field.

Learning for the Future

The Learning for the Future project was created to enhance children's readiness for school and the effectiveness of secondary instruction in specific Kyrgyz Republic communities. The project consists of two components: increasing the equitable access of early childhood education and improving the effectiveness of instruction in secondary education.

To meet these objectives, the program establishes community-based kindergarten programs, which will allow for the enrollment of 20, children. To increase the effectiveness of instruction, the project finances a training program for new teachers and provides digital resources to complement existing learning resources (e.g., textbooks). The project also assesses how well students learn, cognitively and non-cognitively.

World Bank Financials

The World Bank is an organization, rather than a bank. Therefore, its financials are not comparable to traditional financial institutions.

Within the organization operates different sectors: the International Bank of Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA).

The World Bank has loaned the most money, $, million, to India.

The IBRD, the original World Bank, loans money to creditworthy low-income or middle-income countries. For the fiscal year ended June 30, , the IBRD recorded net interest revenues of $2, million and allocable income of $1, million. Its equity-to-loans ratio was %.

The IDA issues credits, or interest-free loans, to the poorest nations. For the fiscal year ended June 30, , the World Bank recorded an adjusted net income of $ million and a deployable strategic capital (DSC) ratio of %, which is the available capital divided by the capital needed to support the portfolio.

IFC provides funds and guidance to the private sector for the purpose of helping developing nations stay on a growth trajectory. For the fiscal year ended June 30, , the World Bank recorded net income loss of $1, million and a total comprehensive income loss of $2, Its DSC ratio was 18%.

Lastly, MIGA directs investments to the poorest countries to help reduce poverty and improve the welfare of a nation's citizens. For the fiscal year ended June 30, , the World Bank recorded net interest revenues of $57 million.

For the fiscal year , the World Bank has distributed $27, million in IBRD loans, $22, in interest-free loans or credits, and $7, million in grants.

History of the World Bank

The World Bank was created in out of the Bretton Woods Agreement, which was secured under the auspices of the United Nations in the latter days of World War II. The Bretton Woods Agreement included several components: a collective international monetary system, the formation of the World Bank, and the creation of the International Monetary Fund (IMF).

Since their founding, both the World Bank and the International Monetary Fund have worked toward many of the same goals. The original goals of both the World Bank and IMF were to support European and Asian countries needing financing to fund post-war reconstruction efforts.

Both the World Bank and IMF outlasted the collective international monetary system which was central to the Bretton Woods Agreement. President Nixon halted the Bretton Woods international monetary system in the s. However, the World Bank and IMF remained open and continued to thrive on providing worldwide aid.

The World Bank and IMF are headquartered in Washington, D.C. The World Bank currently has more than 10, employees in more than offices worldwide.

Though titled as a bank, the World Bank, is not necessarily a bank in the traditional, chartered meanings of the word. The World Bank and its subsidiary groups operate within their own provisions and develop their own proprietary financial assistance products, all with the same goal of serving countries' capital needs internationally.

The World Bank’s counterpart, the IMF, is structured more like a credit fund. The differing in the structuring of the two entities and their product offerings allows them to provide different types of financial lending and financing support. Each entity also has several of its own distinct responsibilities for serving the global economy.

World Banks

Through the years, the World Bank has expanded from a single institution to a group of five unique and cooperative institutional organizations, known as the World Banks or collectively as the World Bank Group. The first organization is the International Bank for Reconstruction and Development (IBRD), an institution that provides debt financing to governments that are considered middle income. The second organization within the World Bank Group is the International Development Association (IDA), a group that gives interest-free loans to the governments of poor countries.

The International Finance Corporation (IFC), the third organization, focuses on the private sector and provides developing countries with investment financing and financial advisory services. The fourth part of the World Bank Group is the Multilateral Investment Guarantee Agency (MIGA), an organization that promotes foreign direct investments in developing countries. The fifth organization is the International Centre for Settlement of Investment Disputes (ICSID), an entity that provides arbitration on international investment disputes.

World Bank FAQs 

What Is the Purpose of the World Bank?

The World Bank is an organization that provides funds, advice, and research to developing nations to help advance their economy and combat poverty.

Who Owns the World Bank?

No person, organization, government, or nation owns the World Bank. It is an organization made up of member countries, represented by a Board of Governors.  This Board governs the organization, creates policies, and appoints executive directors. The executive directors govern the Bank's business and budget, and grant loan approvals. The president and managers manage the day-to-day operations.

Where Does the World Bank Get Its Money?

The World Bank receives funding from wealthy nations and from the issance of debt securities, such as bonds.

Which Country Is the World Bank In?

The World Bank is headquartered in Washington D.C.; however, it has locations in more than countries, including Benin, Argentina, and China.

Who Is the CEO of the World Bank?

The World Bank is led by President David Malpass. The organization's Board of Directors is comprised of four separate Boards, one for each division of the World Bank. Each Board oversees the operations of their respective sector. For example, the Board for the International Bank for Reconstruction and Development (IBRD) oversees the operations for that segment, and the Board for the International Development Agency (IDA) oversees the operations for that segment.

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IBRD Funding Program

World Bank (IBRD) Discount Notes offer investors short-term investment opportunities in US and Euro dollar markets. 

  • AAA/Aaa credit quality for the World Bank (International Bank for Reconstruction and Development, IBRD)
  • A-1+/Prime-1 rating for the World Bank’s discount note program
  • Flexible and customized short-term investment product
  • Offered in maturities of days (13 months) or less in the US and Eurodollar markets
  • Offered through a group of dealers
  • Daily prices posting on Bloomberg.

Where to Access Information on Discount Notes

Rates for World Bank Discount Notes are posted on Bloomberg page ("WBDN"). You can contact any of the following dealers:

  • Barclays Capital Inc.
  • CastleOak Securities, L.P.
  • FTN Financial Capital Markets
  • Jefferies LLC
  • J.P. Morgan Securities LLC
  • Mizuho Securities USA Inc.
  • UBS Securities LLC
  • Wells Fargo Securities LLC

Product Features

  • Aggregate Face Amount: US$50, and higher per maturity date ( days or less)
  • Denominations: US$1,, and integral multiples thereof
  • Governing Law - New York
  • Fiscal Agent - Federal Reserve Bank of New York
  • For information regarding the eligibility of the Discount Notes as investments and collateral, see the Offering Circular

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