The Differences Between The IMF And The World Bank - Business -

The International Monetary Fund and the World Bank, collectively known as the Bretton Woods Institutions, are very similar international organizations that are often mistaken for each other. However, there are subtle differences between them. Below is a brief attempt at pointing out those differences, starting from their histories. History of the IMF According to the IMF website: “During the Great Depression of the 1930s, countries attempted to shore up their failing economies by sharply raising barriers to foreign trade, devaluing their currencies to compete against each other for export markets, and curtailing their citizens' freedom to hold foreign exchange. These attempts proved to be self-defeating. World trade declined sharply, and employment and living standards plummeted in many countries. “This breakdown in international monetary cooperation led the IMF's founders to plan an institution charged with overseeing the international monetary system—the system of exchange rates and international payments that enables countries and their citizens to buy goods and services from each other. The new global entity would ensure exchange rate stability and encourage its member countries to eliminate exchange restrictions that hindered trade. “The IMF was conceived in July 1944, when representatives of 45 countries meeting in the town of Bretton Woods, New Hampshire, in the northeastern United States, agreed on a framework for international economic cooperation, to be established after the Second World War. They believed that such a framework was necessary to avoid a repetition of the disastrous economic policies that had contributed to the Great Depression. “The IMF came into formal existence in December 1945, when its first 29 member countries signed its Articles of Agreement. It began operations on March 1, 1947. Later that year, France became the first country to borrow from the IMF. “The IMF's membership began to expand in the late 1950s and during the 1960s as many African countries became independent and applied for membership. But the Cold War limited the Fund's membership, with most countries in the Soviet sphere of influence not joining.” History of the World Bank The history of the World Bank mirrors that of the IMF. Along with the IMF, it was conceived at the Bretton Woods conference as the International Bank for Reconstruction and Development (IBRD). As the original name implies, it was set-up to provide funds to aid countries in their post-WWII reconstruction efforts. Today, the World Bank is made up of the IBRD and the International Development Agency (IDA).