WHY DO BRETTON WOODS’ INSTITUTIONS EXIST AT ALL? THE INTERNATIONAL MONETARY FUND AND THE WORLD BANK HAVE BEEN PART OF THE INTERNATIONAL FINANCIAL SYSTEM/ARCHITECTURE FOR THE PAST SEVEN DECADES
DOI:
https://doi.org/10.7251/ZREFIS1206273BKeywords:
IMF, international financial system/architecture, system stability, surveillance and structural reformsAbstract
Today, the institutions created in Bretton Woods, the International Monetary Fund (IMF) and the World Bank, are global institutions due to membership that includes almost all countries (187) in the world. Both institutions are public – they are funded by public funds of all the member countries. They were founded and exist due to a vision of global solidarity – the mutual assistance of all countries in the world. The prevailing opinion is that the rationale for these institutions’ mandates is generally related to the developing countries. This is true for the World Bank, provided it finances long-term development projects. However, it is questionable whether the same may be said for the IMF and its mandate. Since its foundation, the IMF has had a special role in the international financial system, that of providing global public goods - the system stability. At the global level, the IMF is in the best position to perform regular annual surveillance for each of its members. The results of these bilateral consultations are the IMF’s advice and recommendations related to adequate macroeconomic policies that member states should implement domestically, which will at the same time prevent “beggar your neighbor” practices. As a Stand–by lender, the IMF is ready to provide (in a reasonable short period) financial assistance for all its member countries to address their temporary macroeconomic imbalances.References
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