The Role Of International Financial Institutions | Simulation

00:04:42
https://www.youtube.com/watch?v=nIf2dlJKmYo

Sintesi

TLDRThis video discusses the history and roles of the International Monetary Fund (IMF) and World Bank, established in 1944 to promote global economic stability and prevent aggressive trade practices after World War II. The IMF initially focused on fixed exchange rates and help for countries facing temporary balance of payments deficits but evolved into a crisis management entity following frequent financial crises since the 1980s. The World Bank aimed to assist post-war reconstruction, later shifting its focus to helping developing nations. The emergence of BRICS countries has led to the creation of new institutions that challenge the existing financial order due to desires for greater representation in global financial governance. The video concludes that while the World Bank may face competition, the IMF remains key as a global lender of last resort.

Punti di forza

  • 🌍 The IMF and World Bank were created in 1944 to promote economic stability.
  • 💵 The IMF assists countries with balance of payments deficits.
  • 🔨 The World Bank initially focused on post-war reconstruction in Europe.
  • 🌱 New institutions by BRICS reflect a call for greater influence.
  • 🏗️ AIIB focuses on infrastructure funding in Asia-Pacific.
  • 🔄 The role of IMF has evolved into crisis management since the 1980s.
  • ⭐ Emerging economies want a stronger voice in global finance.
  • 🏦 The World Bank may face competition from new development banks.
  • 🔑 The US needs to embrace a multilateral approach in financial governance.

Linea temporale

  • 00:00:00 - 00:04:42

    The International Monetary Fund (IMF) and the World Bank were established in 1944 at the Bretton Woods conference, prompted by the U.S. Treasury to mitigate economic instability that contributed to the Great Depression. Their goal was to prevent the recurrence of trade wars and economic aggression, promoting global cooperation. The IMF was designed to manage fixed exchange rates and assist countries with financial deficits, but evolved into a crisis intervention body post-1980s. The World Bank initially focused on European reconstruction but shifted towards promoting economic development in poorer nations. In 2014, the BRICS countries created new institutions like the contingent reserve arrangement and the New Development Bank to address their dissatisfaction with existing institutions. In 2015, China founded the Asian Infrastructure Investment Bank (AIIB), emphasizing infrastructure in the Asia-Pacific. The emergence of these institutions points to a demand for greater representation of emerging economies in global finance, reflecting the need for a balance in decision-making power within the IMF and World Bank.

Mappa mentale

Video Domande e Risposte

  • What are the two major international financial institutions?

    The two major international financial institutions are the International Monetary Fund (IMF) and the World Bank.

  • When were the IMF and World Bank created?

    Both were created in 1944 at the Bretton Woods conference.

  • What was the main purpose of creating the IMF?

    The IMF was created to manage a fixed exchange rate system and assist countries with balance of payments deficits.

  • What role did the World Bank initially serve?

    The World Bank was initially established to assist with the reconstruction of Europe after World War II.

  • What are BRICS countries?

    BRICS refers to Brazil, Russia, India, China, and South Africa, which established new financial institutions in 2014.

  • What is the AIIB?

    The Asian Infrastructure Investment Bank (AIIB) focuses on infrastructure development in the Asia-Pacific region.

  • Why did BRICS create their own institutions?

    BRICS countries sought to secure a greater voice in international financial diplomacy due to frustrations with U.S. governance reform in the IMF.

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Scorrimento automatico:
  • 00:00:03
    The two major international financial institutions are the International Monetary Fund or IMF and the World Bank.
  • 00:00:09
    Both were created in 1944 at the Bretton Woods international monetary conference.
  • 00:00:16
    The U.S. Treasury was responsible for convening the conference. The Treasury believed that it was
  • 00:00:22
    the currency trade wars of the early 1930s that spread the Great Depression globally and created
  • 00:00:29
    the environment of misery and anger that paved the path to war. They were determined to stamp out economic
  • 00:00:35
    aggression in the postwar landscape by creating these two new institutions, which they believed would stop
  • 00:00:45
    countries from resorting to destructive measures like trade protectionism and competitive devaluation
  • 00:00:53
    and would lead to more cooperation. The United States contributed the most capital and it also in consequence
  • 00:01:00
    had the most votes. It was always the only country that had veto power over policy changes within the organizations.
  • 00:01:13
    The international Monetary Fund was created to preside over a new fixed exchange rate system
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    based on the United States dollar. Countries with temporary balance of payments deficits would be able to
  • 00:01:26
    borrow from the IMF on concessionary terms. The IMF found itself taking on a very different role after the
  • 00:01:35
    collapse of fixed exchange rates. International financial crises became much more frequent after the 1980s and
  • 00:01:43
    the IMF was able to reinvent itself as an international crisis firefighter. The world Bank was established initially
  • 00:01:52
    in order to assist in the reconstruction of Europe after the war. It was however the Marshall Plan that the United States
  • 00:02:00
    instituted in 1948 that primarily filled this role and the World Bank went on to focus on other areas in particular
  • 00:02:10
    economic development in poorer countries.
  • 00:02:18
    In 2014 the so-called BRICS countries Brazil, Russia, India, China, and South Africa created two new institutions.
  • 00:02:26
    One is a so-called contingent reserve arrangement, which mimics the activities of the IMF. The resources behind it or rather minimal.
  • 00:02:34
    They also established a so-called new Development Bank that will mimic the activities of the World Bank
  • 00:02:40
    funding mainly infrastructure development in emerging economies.
  • 00:02:46
    More recently in 2015, China spearheaded the establishment of the Asian Infrastructure Investment Bank or AIIB.
  • 00:02:57
    The AIIB will also focus on infrastructure development, but mainly concentrated in the Asia-Pacific region.
  • 00:03:04
    The new Development Bank and the Asian Infrastructure Investment Bank reflect the frustrations in particular
  • 00:03:12
    of China, India, and Brazil over the unwillingness of the U.S. Congress to ratify IMF
  • 00:03:20
    governance reform. They want more say in international financial diplomacy, so establishing their own institutions
  • 00:03:29
    was their mechanism for securing greater voice. The World Bank I believe is going to be facing increasingly useful
  • 00:03:39
    competition from other mechanisms in the coming years. The IMF however really is the closest thing we
  • 00:03:48
    have and probably will ever have to a true international lender of last resort. We've seen over the decades that
  • 00:03:58
    without the IMF the world is very dependent on either direct lending from the U.S. Treasury or from
  • 00:04:05
    currency swaps authorized by the Federal Reserve, but if the United States wants to multilateralize these
  • 00:04:14
    initiatives and not have the world dependent entirely on its own resources, it needs to ensure
  • 00:04:22
    that major emerging economies have a voice commensurate with their new power in the global economy.
Tag
  • IMF
  • World Bank
  • Bretton Woods
  • BRICS
  • AIIB
  • international finance
  • economic development
  • financial crisis
  • global economy
  • infrastructure