Jeffrey Timmermans

Global Economic JournalismClass 10: Global Economic Policy

Supranational economic organizations

✤ Global

✤ World Bank

✤ International Monetary Fund

✤ Regional

✤ Asian Development Bank

✤ European Bank for Reconstruction and Development

The Bretton Woods System

✤ Established in 1944 by the (soon-to-be) victorious powers in World War II

✤ Result of agreement drafted at conference in Bretton Woods, N.H.

✤ Designed to rebuild the global economic framework for trade destroyed by the war

Main Bretton Woods bodies

✤ World Bank

✤ International Bank for Reconstruction & Development (IBRD)

✤ International Development Association (IDA)

✤ International Finance Corporation (IFC)

✤ International Monetary Fund (IMF)

IBRD

✤ Original form of World Bank: initial goal was to fund post-war reconstruction

✤ World Bank’s “hard window”

✤ Borrows cheaply on global capital markets thanks to AAA rating

✤ Lends at market rates to creditworthy nations at 15- to 20-year maturities

Sources: World Bank; Writing About Business (2nd ed.)

IDA

✤ Founded in 1960

✤ The World Bank’s “soft window”

✤ Funded by contributions from more affluent IMF members

✤ Lends to poorest countries at very low interest, for maturities of 35 to 40 years with 10-year grace period

Sources: World Bank; Writing About Business (2nd ed.)

IFC

✤ Founded in 1956

✤ The World Bank’s private-sector arm

✤ Intended to help fund, and spur outside investment in, private infrastructure projects/businesses in developing countries

Sources: World Bank; Writing About Business (2nd ed.)

IMF

✤ Initially charged with overseeing the global monetary system and ensuring exchange-rate stability

✤ Now the “chief overseer” of the global financial system

✤ Lender of last resort for countries

Source: IMF

Special drawing rights

✤ The form in which countries keep their reserves with the IMF

✤ Created in 1969 to preserve Bretton Woods System amid shortage of reserve assets (dollars & gold)

✤ Initially exchangeable into a fixed amount of gold, now exchangeable into a basket of major currencies at a floating rate

An evolving system...

✤ Under Bretton Woods, the U.S. dollar was pegged to gold and other currencies were pegged to the dollar

✤ But other countries could adjust the peg level

✤ In effect, the dollar became the world’s reserve currency

✤ But a shortage of gold in the U.S. spurred Nixon to abandon the dollar’s peg to gold in 1973 and the fixed exchange-rate system collapsed

✤ Now, the market sets prices of currencies instead of governments

An outdated system...

✤ Staffing issues

✤ World Bank headed by an American

✤ IMF headed by a European

✤ Policy issues

✤ Economic orthodoxy

✤ Summits are mostly ceremony: the news happens on the sidelines

...with some advantages for journalists

✤ Summits great for sourcing

✤ Not just senior people, but the staff who do the real work

✤ Experts with deep subject knowledge, especially about emerging markets

✤ Trove of data online

Covering supranationals

✤ Annual reports (September)

✤ Other reports/rankings (World Development Report)

✤ Staff changes

✤ Senior appointments often dictated by historical conventions

Covering summits

✤ Plan ahead!

✤ Create coverage plan

✤ Create facebook of officials with photos, names, contact details

✤ Plan to doorstep key officials

✤ Keep after sources to get advance draft of any final statement

✤ Grab officials in hallways/restaurants/bathrooms for on-the-sidelines impromptu interviews