(IGP) GS Paper 1 - Economic & Social Development - "Bretton Woods Institutions and Others"

Subject - Economic and Social Development
Chapter - Bretton Woods Institutions and Others

Bretton Woods Conference

The United Nations Monetary and Financial Conference, commonly known as Bretton Woods conference, was held in Bretton Woods, New Hampshire, USA to regulate the international monetary and financial order after the conclusion of World War II. The conference resulted in the agreements to set up the International Bank for Reconstruction and Development (IBRD)- popularly known as World Bank and the International Monetary Fund (IMF).The IMF was set up to foster monetary stability at global level. The IBRD was created to speed up post-war reconstruction. The two institutions are known as the Bretton Woods twins.

IMF

The International Monetary Fund, a UN specialised agency, was established under the Bretton Woods Agreement in 1944 along with the World Bank. It has 187 members (2011). It is headquartered in Washington and its Managing Director is Christine Lagarde. It started functioning in 1947.

IMF objectives are:

• To promote international monetary cooperation
• To facilitate balanced growth of international trade for the economic growth of all member countries
• To promote exchange rate stability; maintain orderly exchange rate arrangements; and to avoid competitive exchange rate revaluation
• To help members in times of balance of payments crisis.

SDRs

• The SDR is an international reserve asset, created by the IMF in 1969 to supp1ement its member countries’ official reserves. Its value is based on a basket of four key international currencies- dollar, euro, yen and pound. SDRS can be exchanged for national currencies.
• SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. Holders of SDRs can obtain these currencies in exchange for their SDRs.

World Bank Group and World Bank

• The World Bank Group (WBG) is a family of five international organizations that gives loans, generally to poor countries. The Bank came into existence in 1945 following international ratification of the Bretton Woods agreements, which emerged from the United Nations Monetary and Financial Conference (1944). It is responsible for the preparation of the World Development Report. Commencing operations in 1946, it began operations for post-war reconstruction. Its current role is different as it focus is to lend to and develop the poor countries and help fight poverty in all its facets.
• The Group’s headquarters are in Washington. It is an international organization owned by member governments; although it makes profits, these profits are used to support continued efforts in poverty escalation.
• Technically the World Bank is part of the United Nations system, but its governance structure is different: each institution in the World Bank Group is owned by its member governments, which subscribe to its basic share capital, with votes proportional to shareholding. Membership gives certain voting rights that are the same for all countries but there are also additional votes which depend on financial contributions to the organization. The President of the World Bank is conventionally an American and currently is Robert Zoellick. There are 187 countries in the WB today. Tuvalu is the 187th member of WB.

Its five agencies are:

• International Bank for Reconstruction and Development (IBRD)
• International Development Association (IDA)\
• International Finance Corporation (IFC)
• Multilateral Investment Guarantee Agency (MIGA)
• International Centre for Settlement of Investment Disputes (ICSID)

IBRD

The International Bank for Reconstruction and Development (IBRD) is one of five institutions that comprise the World Bank Group. The IBRD is an international organization whose original mission was to finance the reconstruction of nations devastated by World War II. Now, its mission has expanded to fight poverty by means of financing states.

IDA

• The International Development Association (IDA), is the part of the World Bank that helps the world’s poorest countries. It complements the World Bank’s other lending arm the International Bank for Reconstruction and Development (IBRD) — which serves middle-income countries with capital investment and advisory services.

• IDA was created in 1960 and is responsible for providing long-term, interest-free loans to the world’s 80 poorest countries. IDA provides grants and credits with repayment periods of 35 to 40 years.

MIGA

• The Multilateral Investment Guarantee Agency (MIGA) is a member of the World Bank group. It was established to promote foreign direct investment into developing countries. MIGA was founded in 1988 and is headquartered in Washington.

• MIGA promotes foreign direct investment into developing countries by insuring investors against political risk, advising governments on attracting investment etc.

ADB

• ADB is an international development finance institution whose mission is to help its developing member countries reduce poverty and improve the quality of life of their people.

• Headquartered in Manila, and established in 1966, ADB is owned and financed by its 67 members, of which 48 are from the region and 19 are from other parts of the globe.

• ADB’s main partners are government the private sector, non-government organizations development agencies, Community based organizations, and foundations.

G-20

The Group of Twenty (G-20) Finance Ministers and Central Bank Governors was established in 1999 to bring together systemically important industrialized and developing economies to discuss key issues in the global economy. The inaugural meeting of the G-20 took place in Berlin in 1999, hosted by German and Canadian finance ministers.

OECD

• The Organisation for Economic Co-operation and Development (OECD) is an international economic organisation of 34 countries founded in 1961 to stimulate economic progress and world trade. It defines itself as a forum of countries committed to democracy and the market economy, providing a platform to compare policy experiences, seeking answers to common problems, identifying good practices, and co-ordinating domestic and international policies of its members.

• The OECD originated in 1948. Later, its membership was extended to non-European states. The OECD’s headquarters are in Paris.

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