Context:
Bretton Woods Conference celebrates its 80th Anniversary
Bretton Woods Conference:
- Objectives – To frame a new set of rules for the post-World War II international monetary system.
- Key Outcomes –
- Creation of ‘Bretton Woods twins’ – International Monetary Fund (IMF) and World Bank (WB).
- Fixed exchange rate regime
- Accordingly, each member country have fixed their currency in terms of gold or US dollar.
- However, nations started promoting floating exchange rate after the crisis of dollar exchange crises of 1971
- Promotion of Free Trade
International Monetary Fund (IMF) and World Bank (WB):
| Basis for Comparison | International Monetary Fund (IMF) | World Bank (WB) |
| Meaning | An international organization maintaining the global monetary system. | A global organization established to finance and advice the developing nations, in order to make them economically developed. |
| Focus on | Economic Stability (Provides assistance) | Economic Growth (Facilitates lending) |
| Size | 2300 staff members | 7000 staff members |
| Organizational Structure | A single organisation that consists of the Board of Governors, Ministerial Committees, and the Executive Board. | Has 2 major institutions, namely International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). |
| Membership | 188 countries | IBRD – 188 countries IDA – 172 countries Countries must first join the IMF to be eligible to join the World Bank Group |
| Operations | Oversee the international monetary systems and promotes international monetary cooperation. Promote exchange stability and orderly exchange relations among its members. Assists members in temporary BOP difficulties by providing them with the opportunity to correct maladjustments in their BOP. Draw its financial resources principally from the quota subscriptions of its members. | Seeks to promote economic development and structural reforms in developing countries. Provides special finance assistance to the poorest developing countries through the IDA. Stimulates private enterprise in developing countries through its affiliate, the International Finance Corporation. Acquires most of its financial resources by borrowing on the international bond market. |
Source: World Bank
Previous Year Question
Recently, which one of the following currencies has been proposed to be added to the basket of IMF’s SDR?
[UPSC Civil Services Exam – 2016 Prelims]
(a) Rouble
(b) Rand
(c) Indian Rupee
(d) Renminbi
Answer: (d)
