“In an effort to rebuild the international economic system in the wake of World War II, delegates from Allied nations all over the world over established the International Monetary Fund (IMF) and World Bank with the Bretton Woods Agreement, on this day in 1945.
Although the institutions it created were officially established on 27 December 1945, the actual Bretton Woods conference took place in July 1944. Some 730 delegates from all 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, to determine how to regulate the international monetary and financial order after World War II. The parties attendant at Bretton Woods largely subscribed to a Wilsonian belief that free trade promoted global prosperity and peace. They were convinced that the policies adopted to combat the Great Depression in the ’30s and early ’40s—high tariffs, currency devaluations, discriminatory trading blocs—resulted in a precarious international environment. The determination, then, was that economic cooperation was the only way to achieve peace and prosperity.
As such, on 27 December 1945, the International Monetary Fund and the World Bank were established. The lofty goal given to the World Bank was reduction of poverty. Comprised of the International Bank for Reconstruction and Development and the International Development Association, along with three other groups, the World Bank provides loans to developing countries. Its actions must generally meet a tripartite goal of encouraging foreign investment, promoting international trade, or facilitating capital investment. The first recipient of World Bank aid was France, which received US$250 million in loans, with strict conditions. As many Europeans looked to the Marshall Plan, rather than the World Bank, for post-war aid, the Bank gradually shifted to serve mostly non-European, developing countries. In recent years the World Bank has come under criticism for its free market reform policies, which critics say can be harmful to economic development if implemented poorly, too quickly, or in weak economies. They also charge the Bank with a modern form of imperialism.
The World Bank’s sister institution, the IMF, was originally created with 29 signatories to stabilise exchange rates and reconstruct the world’s international payment system. Its stated objectives are to promote international economic cooperation, international trade, employment, and exchange rate stability. The number of IMF member countries has more than quadrupled since its creation, and with it, its influence in the world. Like the World Bank, the IMF also comes under fire for some of its tactics, like austerity programs, but its positive impacts on hunger, public health, and the environment are notable.
The World Bank has loaned more than US$330 billion to developing countries since the 1940s.”