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Bretton Woods Institutions (IMF and World Bank): history and modern situation

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  1. Bretton-Woods: The settlement of the two main economic institutions.
    1. Economic contexts.
    2. The conference of Bretton Woods.
    3. The creation of the IMF and of the IBRD.
  2. The World Bank and IMF, two economical institutions.
    1. The IMF institution.
    2. What is the World Bank today?
  3. Legitimacy of the Institutions in financial crisis.
    1. The World Bank and the IMF in the debt's crisis of the third world.
    2. Internal crisis: How to lean the lack of credibility of the WB?
    3. Consequence of crises: Questioning of their actions.
  4. Conclusion.
  5. Bibliography.

To go out of the chaos caused by World War 2, countries had to set up new institutions liable to restore a stable and durable international order. This reconstruction was led by the United States of America and its allies. From 1941, in the Atlantic chart, the allies wanted to affirm again the freedom principles concerning navigation, international transactions and the access to raw materials. Thanks to these principles, they subscribed to liberalism thesis and they underlined their opinions against protectionism. In 1945, this liberalist thought benefited from the dominant influence of the USA and it also coincided with the well know interest of America. In fact, the huge national production in the USA needed huge exterior open markets. Moreover, very conscious of its economic position linked to the war, the American bankers wanted to be reimbursed in non devaluated money. That is why, USA desired to elaborate a new economic and international system.

[...] Each of these institutions has its own area of responsibility and specialization and its particular contribution to make to the world economy. The IMF's collaboration with the World Bank on poverty reduction is especially close because the Bank is the leading international institution promoting economic development. Areas in which the IMF and World Bank collaborate include social policies, assessments of member countries' financial sectors, development of standards and codes. The IMF is also a member of the Financial Stability Forum, which brings together government officials responsible for financial stability in the major international financial centers. [...]

[...] The IMF and the World Bank jointly launch the Heavily Indebted Poor Countries (HIPC) Initiative with the aim of reducing the external debt of the world's poorest and heavily indebted countries to sustainable levels in a reasonably short period. Globalization of the financial markets thus demanded the adaptation of the mechanisms of the financing The IMF replaces the Enhanced Structural Adjustment Facility with the Poverty Reduction and Growth Facility, which gives explicit attention to poverty reduction, and the HIPC Initiative is enhanced to provide faster, broader and deeper debt relief. [...]

[...] The Bretton Woods Conference led to the establishment of the IMF and the IBRD (now the World Bank), which still remain powerful forces in the world economy. As mentioned, a major point of common ground at the Conference was the goal to avoid a recurrence of the closed markets and economic warfare that had characterized the 1930s. Thus, negotiators at Bretton Woods also agreed that there was a need for an institutional forum for international cooperation on monetary matters. Already in 1944 the British economist John Maynard Keynes emphasized "the importance of rule- based regimes to stabilize business expectations"?something he accepted in the Bretton Woods system of fixed exchange rates. [...]

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