The World Bank and The IMF: Twins or Rivals? Essay examples

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The World Bank and The IMF: Twins or Rivals? Both institutions, the World Bank and the International Monetary Fund, were established more than fifty years ago; and the foundations of both were expected to play roles in stabilizing the frustrated global economy and aiding post-war European countries as well as other developing countries for economic progress. In the first three decades, both institutions had their own respective functions and extensively engaged in different economic and financial activities. In general, the World Bank primarily concentrated on making long term loans to finance infrastructural projects in developing countries, as the IMF mainly provided economic consultation as well as short-term loans to both…show more content…
The World Bank concentrated on two major tasks: reconstruction and development of industrial countries, especially post-war European nations (Driscoll). During its first two decades, according to Polak, “43 percent of its lending went to industrial countries in Europe” (2). These countries included Britain, French, as well as Germany that needed a great amount of funds to rebuild their economy. In addition to these European nations, many other loans were lent to Japan, New Zealand, as well as Australia. Evidently, the World Bank was very reluctant to lend their loans to developing countries during the early period. On the other hand, the IMF was performing a very different function. As the center of the post-war international monetary system that was based on the fixed exchange rate, the IMF played a role as a guardian of the international monetary system and helped the member states to stick to the rules of the system. These processes were known as credit operations that helped both developing and developed countries to avoid unexpected monetary frustration (Moffitt 32). The funding of the two organizations also differed significantly. The World Bank’s funds were most raised from international capital markets, but have no connection with any particular countries’ shareholding. Nevertheless, the members of IMF paid their contribute at a relatively equal amount according to their quota; but the funds were paid in their own currency.
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