(Functions of) The International Monetary Fund[->0] and the World Bank[->1] were both created at an international conference convened in Bretton Woods, New Hampshire, United States in July 1944. The goal of the conference was to establish a framework for economic cooperation and development that would lead to a more stable and prosperous global economy. While this goal remains central to both institutions, their work is constantly evolving in response to new economic developments and challenges. The International Monetary Fund (IMF) and the International Bank for
Reconstruction and Development (IBRD), also known as the Bretton Woods Institutions
(BWIs), were formed in Bretton Woods, New Hampshire in 1944 on the eve of the end of
World War II. They were precursors to the United Nations and other multilateral institutions formed after World War II and reflected the new spirit of cooperation between nations, especially in economic matters. As you will learn in this E-Book, the operations of the BWIs have had an important impact on concepts of development and development policy. The IMF Articles of Agreement are intended to be a Code of Good Conduct controlling members’ monetary policies. Article I, which lists the purposes of the IMF, reflects the founders’ view that the IMF’s primary function should be to keep the international monetary system running smoothly. Monetary order, in turn, would promote economic growth and fair trade, goals stated in Art. I (ii). The IMF addresses these goals in various ways. Let’s begin with a brief discussion of the Bretton Woods fixed exchange rate system, which is related to the gold exchange standard we mentioned earlier. There are two primary organs within the IMF: the Board of Governors and the
Executive Board. Each member country has one representative, typically its finance minister or the head of its central bank, on the Board of Governors, which meets once annually.
Members of the Board of Governors also serve on two important committees. The
International Monetary and Financial Committee considers key monetary system policies.
The Development Committee—a joint committee with the World Bank—advises the Board on policies and matters concerning developing countries. The founders of the Bretton Woods Institutions were very worried that after World
War II the events of the inter-war period would repeat themselves. They sought to prevent this reoccurrence by setting up a system that would provide monetary order as well as facilitate investment in economies where little