BRETTON WOODS INSTITUTIONS

Bretton Woods Institutions

Performance and Reforms



Bretton Woods Institutions

Introduction

International Monetary Fund (IMF) and the World Bank are known as the Bretton Woods Institutions. The institutions were set up in July 1944, when a meeting of 43 countries was held in Bretton Woods, New Hampshire, USA. The basic aim of the institutions was to rebuild the world economy which suffered huge losses due to the war. Promotion of international economic cooperation is the back bone of the objectives of the Bretton Woods Institutions. The countries had a plan for the creation of an International Trade Organization earlier, which was actually turned into reality in 1990's when the world trade Organization (WTO) formally came into being.

How effective these Bretton Woods Institutions have been in achieving their fundamental aims and objectives remains a question to be answered cortically and carefully. The International Monetary Fund (IMF) and the World Bank, which were started to help poorer nations, are engaged in serving the financial and political interests of the Wall Street and the Washington. (Whalen, Christopher) The institutions don't follow their basic guiding aims and objectives for their actions.

It is been observed that the Bretton Woods institutions didn't perform according to their mandate and the fundamental aims and objectives. Instead of being economic institutions the institutions are found to be political ones. With veto power in the hands of the United States of America (USA), the institutors are just listening to the US instead of listening to the countries which actually get affected by the changes in their economic policies. Thus few major countries of the world dominate the two institutions. The institutions need reforms in the areas of quota allocation. Most of the economists believe that the decisions taken by the institutions are complete driven by the political factors and dictated by the United States of America (USA). The US uses the two institutions for its national and political interests instead of the interests of the developing countries.

Body

According to the handbook of International monetary Fund 2007, The International Monetary Fund (IMF) is an international organization that works independently. The organization works for the cooperation of the world economies. Thus economic stability and growth of the member countries are the basic aims and objectives of the institutions. The countries which are the members of the institution are the shareholders of the IMF, who provide capital to the IMF on the basis of a quota subscription. In return the IMF provides technical, financial and economic advice and assistance whenever needed. The mandate of the IMF is as below (Handbook IMF, 2007)

Promotion of International Monetary Cooperation

Promotion of International trade, employment and real income

Promotion of stability in the exchange rates among countries

Elimination of all restrictions that block economic growth of the world

The International Monetary Fund keeps an eye over the economic activities of the member countries. The various economic policies adopted by the member countries have to be in accordance with the advices of the International Monetary Fund. These economic policies need to be very much consistent with ...