WASHINGTON - The World Bank and Japan will launch a new fund to provide capital to banks in emerging countries struggling to cope with the global financial crisis, the multilateral institution said Monday.
The International Finance Corporation (IFC), a World Bank arm that provides investments to build the private sector in developing countries, and the Japan Bank for International Cooperation (JBIC) signed the launch agreement, the World Bank said in a statement.
The IFC will manage the new bank recapitalization fund through a separate dedicated fund management company. The fund will serve emerging market banks "currently lacking alternative financing given the global financial crisis," the Washington-based development lender said.
"The fund will help ensure banks in developing countries can continue to lend and support economic recovery and job creation through the current economic and financial crisis," it said.
JBIC's investment of two billion dollars in the fund was announced by Finance Minister Shoichi Nakagawa during the annual meeting of the International Monetary Fund and the World Bank in October.
The World Bank said the agreement was signed Monday at JBIC headquarters in Tokyo by Lars Thunell, IFC's executive vice president and chief executive, and JBIC CEO Hiroshi Watanabe.
"By investing in this fund, we are countering disruptions to the international financial system and to the global economy," Watanabe said in the statement.
"The agreement with IFC is an important step in accomplishing our mission toward this end."
Thunell thanked Japan "for becoming a founding partner and generously contributing to the fund. We aim to get it up and running as quickly as possible."
The IFC, which aims to spur economic growth in the fight against poverty, reported that new investments totaled $16.2 billion in fiscal 2008 that ended June 30, a 34 percent increase over the previous year.