INSTITUTES OF GLOBAL IMPORTANCE:WORLD BANK (IBRD) AND IMF

 AS A GLOBAL FINANCIAL INSTITUTIONS

Evolution:

• 1930s great depression >fall of gold standard > increasing trade barriers (Old International Monetary System)
  
•  Bretton Wood's conference in 1944 > agreement reached
• Twin institutions established  named: World Bank and IMF ( two important legacy of New International Monetary System )
  

 IMF: 

• Brain child of J. Keynes and Harry Dexter White to oversee the international exchange rate system, international payments and financial system to bring stability into the IMS. 
• Works: 
• To promote international monetary cooperation
• To facilitate the expansion and balanced growth of international trade
• To promote exchange stability
• To give confidence to members through making funds available to them

• Special Drawing Rights: International monetary reserve asset. 
• SDRs were created in 1969 by the IMF in response to the Triffin Paradox (More U.S. dollars as a base reserve currency > less faith in US government to convert those dollars to gold.)

 World Bank 

• Its formal name is the International Bank for Reconstruction and Development (IBRD)
• Works: 
• To finance economic development in developing and war torn countries.
• To promote economic and social progress in developing countries by helping raise productivity
• World Bank consists of : IBRD and IDA.  

The World Bank conditions for advancing loans to UDCs:   

1. The overall economy is soundly operated
2. Basic soundness of economy if overall economic plan introduced, and
3. The projects to finance are economically and financially justified.

World bank and India development: 

• Largest recipient of development finance from the World Bank with the share of 15%.   
• Mainly for development purposes
• The major projects financed by the Bank are railway, generation of power, multipurpose projects, development of aviation, iron and steel industry, coal, mining, agriculture, telecommunication, etc.
• Extended loans to the financial institutions like Industrial Development Bank of India (IDBI) and Industrial Credit and Investment Corporation of India (ICICI).

Source