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World Bank Imf Analysis

By:   •  July 8, 2012  •  Essay  •  592 Words (3 Pages)  •  1,477 Views

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The World Bank, referred to officially as the International Bank for Reconstruction and Development (IBRD), is an agency of the United Nations and a collection of international organizations that assist countries in their process of economic development with loans, advice, and research. It was founded in the 1940s to aid Western European countries devastated financially by World War II. In the past several decades the World Bank has shifted its focus from the advanced industrialized nations to developing third-world countries and concentrates on foreign exchange reserves and the balance of trade. In return for this assistance, the country must adhere to strict budgetary reforms and must agree to cut back on spending while supporting its own currency. In addition to the IBRD, the United Nations created another agency to help facilitate the expansion and balanced growth of international trade called the IMF.

The International Monetary Fund, or IMF, was developed to lower trade barriers between countries and to stabilize currencies by monitoring the foreign exchange systems of the member countries, and lending money to developing nations. The IMF promotes international monetary cooperation and makes its general resources temporarily available to its members experiencing balance of payments difficulties. A good example would be when the price of oil quadrupled in the mid 1970s. Developing countries faced strong inflationary pressures and a reduction in demand for exports. In response to this crisis, the IMF created an oil subsidy account established for the poorest countries to alleviate the cost of borrowing. Many people confuse the World Bank for being the IMF and vice versa. It is important to note that even though these are separate agencies, membership into the IMF is required before you can become a member of the World Bank. There are other differences that set these two agencies apart.

The World Bank and the IMF are twin intergovernmental pillars supporting the structure of the world's economic and financial order and were both created by the United Nations. Despite these and other similarities, however, the Bank and the IMF remain

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