Types of Regional development financing arrangements:
Regional development financing arrangements have been of three basic types.
The oldest and best-developed type is multilateral development banks and related multilateral financial institutions. These institutions are present in all regions, although with different coverage, structures, and priorities. A second type, which is usually used by the European Union, is fiscal transfers with explicit redistributive regional objectives. A third and more novel type is the development of regional bond markets; East Asian countries have taken the most significant steps in this regard. Regional financial cooperation faces significant challenges, which must not be underestimated. They relate to the viability and long-term sustainability of the arrangements that are created, and involve three major issues: the capacity of a given group of developing countries to supply the relevant financial services; the need to guarantee that strong regional institutions are developed; and an equitable distribution of the benefits of regional integration.