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World Bank vs IMF

World Bank and IMF are two very important specialized agencies of United Nations. To
understand the roles, functioning and responsibilities of these autonomous bodies, World Bank
and IMF, a brief look into history is necessary. In 1944, with World War II raging, delegates
from 44 allied nations gathered in Bretton Woods, Washington, US and finalized Bretton Woods
agreement which gave birth to World Bank and IMF. This agreement laid rules for commercial
and financial relations between member states of the world. IMF and World Bank were set up
and later joined and ratified by most of the countries of the world. All countries agreed to tie
their currency with US dollar and also upon the role of IMF to look into imbalance of payments
problems of the countries. In 1971, US unilaterally terminated convertibility of dollar to gold,
thus bringing to an end Bretton Woods agreement. USD became the sole backing of world
currencies and a source of reserve currency for all countries of the world.
The difference between the World Bank and the IMF is not easy to understand. Even the
founding father of the two institutions, John Maynard Keynes, the most brilliant economist of the
20th century said that the names were confusing and that bank should be called a fund, and the
fund, bank.
World Bank
World Bank was set up under Bretton Woods system on 27 December, 1945 in Washington D.C.
An international financial institution, World Bank has an aim to reduce poverty in member
states. It provides loans for economic programs to countries. It is guided by a commitment to
promote foreign investment, particularly capital investment, and international trade. It provides
technical and financial assistance to poor countries for development of infrastructure such as
building roads, hospitals, schools etc. Nearly all countries of the world are members of World
Bank.
Traditionally, World Bank President comes from US.
IMF
IMF was also founded on 27 December, 1945 in Washington D.C with the objective of
promoting global monetary cooperation and international trade. It seeks to promote employment
and secure financial stability in member countries. IMF looks into macroeconomic policies of
countries to see its impact on exchange rates of currencies and also the balance of payments
problems of member states. It engages in providing loans at lower rates of interest thus acting as
the biggest international lender. Traditionally, IMF President comes from Europe.
Differences between World Bank and IMF
In recent times, the functions and roles of the two international institutions have often
overlapped, so much so, that it has become difficult to demarcate the differences between the
two.
But broadly speaking, while IMF concerns itself with macroeconomic policies of member states,
balance of payment problems, international trade policies and exchange rates of different
currencies, World Bank takes up cases of different countries on individual level. It concerns
itself with economic policies within a country, look for ways to improve economic conditions,
and also how to correct government spending to improve the situation. World Bank takes up
development projects in different countries by providing financial assistance on easy terms.