The IMF and the World Bank
It is no doubt that the International Monetary Fund (IMF) and the World Bank have been playing an essential role in fostering economic stability and global growth for a long period of time. For the common good, they share the same goal of raising living standards for their member countries. And for that reason, there have been some people having difficulties in differentiate one from another. As a matter of fact, both the IMF and the World Bank are institutions in the United Nations system. Even though these institutions are heading over to the advancement and prosperity of global economy, the IMF concentrates on macro-economic issues whist the World Bank focuses on long-term economic development and poverty reduction.
1. The IMF
It is true that the IMF works as a surveyor to oversee the global economy. The IMF is currently considered a specialized agency of the United Nations. To be more specific, it facilitates the expansion as well as the growth of international trade, providing advices and financing to member in economic difficulties to help achieving the stability of macro economy and reducing poverty. This gives rise to the maintenance and promotion of employment as well as the development of country’s resources. These actions can be the so-called underlying objectives of the economy policy. Another function among the ones upon the formation of IMF worth mentioning here is promoting the exchange stability. It means that the IMF has to oversee the exchange rate arrangements among countries. By doing that, it helps government manage exchange rate, then avoiding competitive exchange depreciation. More importantly, this function is the key factor that prevents the international economic crises and its spread. However, rather than maintaining only the exchange rates, it is more worthwhile to oversee the economic and financial policies in order to get a broader view on the reasons why there have been economic crises, the shortages of capital, the consequences of policies and other factors influencing the economy of certain country. The IMF is also mandated to mastermind the international monetary and financial system. Therefore, it is wise to shift to next advanced step of examining the economic policies of countries with IMF loan agreements. In addition, the IMF also assists to establish the multilateral system of payments in respect to current transactions between members and the elimination of foreign exchange restrictions that hinder the growth of the world trade. As mentioned before, the IMF will provide the provision of short-term loans of one to three years. These are mainly designed to correct the deficit and take measures about foreign exchange controls, reducing growth in domestic money supply, reducing restrictions on foreign investments, depreciating the currency and so forth. All in all, these activities can be known as surveillance and facilitate international cooperation. The IMF is currently considered a specialized agency of the United Nations.
2. The World Bank
The World Bank is an international financial institution which assists the economic development by providing low or even no-interest loans and grants to developing countries. Many people have been confusing between the World Bank and the World Bank group. In fact, the World Bank comprises the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) while the World Bank group involves the World Bank, the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Center for Settlement of Investment Disputes (ICSID). In the same vein, the World Bank is regarded as a specialized agency of the United Nations currently with the motto “Working for the world free of poverty”. In contrast to the IMF, the World Bank focuses on the long-term development of the...
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