Bretton Woods Institutions

Intl. Monetary Fund (IMF)• Founded 27th Dec, 1945 (29 Founding Countries)• Current Membership – 189• H.Q: Washington D.C• Aims: To Foster Global Monetary Co-Operation, Secure

Financial Stability, Facilitate Intl. Trade, Promote High Employment & Sustainable Economic Growth & Reduce Poverty

• Organs: 1. Board of Governors (2 Governors from each country) 2. Executive Board (24 Executive Directors) 3. Managing Director (Chairman of Executive Board, European, currently Christine Lagarde, France)

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IMF: Functions• Primary:

o Fixed Exchange Rate (floating Exchange Rates since 1971)

o Short term capital to aid BoP

• Other

o Policy, advice & financing to members

o Macro economic stability & poverty alleviation in developing countries

o Loans

– Zero Interest Rates: Extended, Standby, Rapid (Credit Facility)

– Non-zero Interest Rates: Standby Arrangement, Flexible Credit Line, Precautionary

& Liquidity Line, Extended Fund Facility

– Emergency: Rapid Financing Instrument

o Surveillance of Global Economy

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IMF: Features1. Special Drawing Right (XDR): •Supplementary Forex assets•Created in 1969; shortage of Gold & US $•Value depends on Basket of Key Intl. Currencies – US $=41.73%– Euro=30.93%– Chinese Yuan=10.92% w.e.f Oct. 2016– Yen=8.33%– British Pound=8.09%

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IMF: Features2. Quota SystemQuota Decided by: Average GDP (50%)Openness (30%)Economic Variability (15%)Intl. Reserves (5%)Roles of QuotaDetermination of Subscription (25% in SDRs, $, Yen, etc.; 75% in own currency)Voting Power (Basic + 1 Vote for every 100,000 SDR)Access to Financing

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IMF Reforms• Started in 2010• Partnership with other Specialist Agencies – UNICEF,

FAO, UNDP• Voting Reforms (85% Voting Power is required);

India’s voting power increased from 2.3% to 2.6% in Jan.2016 (Top 10); China’s to 6% from 3.8% (3rd, after US & Japan)

• US share down to 16.5% from 16.7%• Elected Executive Directors as against Appointed Exec.

Dirs.• ‘Global Safety Net’ – tackle liquidity crises

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World Bank • Estd. : July 1944• H.Q: Washington D.C• Members: 189 (IBRD); 173 (IDA)• President: Jim Yong Kim (US)• Objectives: Reduction of Poverty, Foreign Investment & Intl.

Trade• Component of ‘World Bank Group’:1. Intl. Bank for Recons. & Dev. (IBRD)2. Intl. Dev. Asso. (IDA)3. Intl. Finance Corp. (IFC)4. Multilateral Investment Guarantee Agency (MIGA)5. Intl. Centre for Settlement of Investment Disputes (ICSID)

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IBRD• Objectives: Development assistance & Poverty reduction• H.Q: Washington D.C• Loans to middle income developing countries; only to Sovereign Govts. Or

Projects backed by them (No Pvt. Funding)• Long term loans; with maturities upto 30 Years• Catastrophe Deferred Drawdown Option- financing after natural disaster or

during ‘Emergency’• Sectors funded:• Transportation, Infra., Education, Environmental Protection, Energy,

Potable Water, Sanitation• Governed by World Bank: Board of Governors (1 from each country) Board of Directors (25) President

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• IDA• Concessional Loans to Poorest Countries: Lowest GNI, Troubled Creditworthiness

& Lowest PCI• Single largest provider of funds to economic& human dev. Projects in World’s

Poorest Nations

• IFC• ‘Pvt. Sector Development & Poverty Reduction’• Investment adisory, Asset Mgmt. services to Pvt. Sector in developing countries

• MIGA• ‘Political Risk Insurance, FDI’• Insurance for risks: Currency Inconvertibility, Expropriation (War, Terrorism),

Breaches of Contract

• ICSID• Intl. Arbitration Inst. • 153 Members signed the Treaty to enforce & uphold ‘Arbitral Awards’

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Thank You !!!