The International Monetary Fund and the World Bank are two multilateral organizations that were born after the Bretton Woods Agreements, in 1944. It was a historic meeting since the rules for commercial and financial relations between the most industrialized countries in the world were established. This is due to the need to achieve peace after the First World War.
In the same way, to guarantee the proper functioning of a globalized economy, the dollar is established as the reference currency worldwide and, in 1946, the two organizations that we differentiate in this article began to function.
But do you know the difference between the IMF and the World Bank? Although these are institutions with many similarities, they also present numerous differences that we must point out. Well, although both were born the same year, their objectives already present notable differences.
Thus, the International Monetary Fund was created to guarantee the stability of the international monetary system. While, on the other hand, we have the World Bank, which, among its actions, is responsible for providing financing or financing, policy advice and assistance to governments of those territories or economies that are developing.
However, these agencies carry out more actions. So let’s see what they are!
International Monetary Fund (IMF)
The International Monetary Fund or IMF is a multilateral organization that was born in 1946. It integrates 190 countries around the world. Its headquarters are established in Washington DC. And it employs more than 2,700 people around the planet.
The main function of the IMF is to guarantee the stability of the international monetary system. In other words, it sets up an international payment system that allows citizens across the globe to transact with each other.
Among other actions carried out by the International Monetary Fund (IMF), the promotion of international monetary cooperation should be highlighted. And this, while guaranteeing financial stability, promoting free international trade, promoting economic growth and reducing poverty by boosting employment.
Finally, to comply with all this, the IMF is working on granting loans, which try to alleviate the bad economic situation. In this sense, solving problems such as the balance of payments, as well as providing help to its members. For this reason, it is also in charge of following the different economies of the member countries.
Ultimately, it should be noted that to be a member of the World Bank, you must have previously been a member of the IMF.
The World Bank
The World Bank, like the IMF, is another multilateral organization that was born after the Bretton Woods meeting, that is, in 1944, although it was not until 1946 that it began its activity. This body is based in the city of Washington DC and has 189 member countries; a figure very similar to that recorded by the IMF.
Finally, the World Bank has more than 130 offices around the world. This, while having numerous projects and more than 5,000 professionals who work as consultants for the organization.
The main function of the World Bank is to provide financing and advice, promoting the development of economies that are underdeveloped or that are in the process of developing.
Among other actions, those carried out by the agencies dependent on the World Bank stand out. It is responsible for, among other things, reducing poverty, combating unemployment, promoting sustainable development, increasing prosperity and opportunities, promoting the private sector, as well as many others.
The World Bank Group
The World Bank Group is one of the most important sources of finance and knowledge for developing countries.
However, the fact that we have called it a “group” is due to the fact that this body, in turn, is made up of five institutions that have committed themselves to the same objectives pursued by the IMF.
Among these, the following stand out:
- The International Bank for Reconstruction and Development (IBRD): Promotes poverty reduction. In order to be a member of another body dependent on the IMF, we must first be members of it.
- International Finance Corporation (IFC): It promotes economic growth and development through assistance offered to the respective private sectors. In this sense, granting loans, among other matters.
- International Development Association (IDA): It promotes and encourages reforms and investments aimed at fostering increased productivity and employment.
- Multilateral Investment Guarantee Agency (MIGA): In addition to providing guarantees to lenders and investors, it conducts research and disseminates content.
- International Center for Settlement of Investment Disputes (ICSID): It promotes foreign investment in developing countries.
- Trust Funds at the World Bank: These funds serve to complement all the previous tasks, with specific actions.