The Birth and Pecularities of the Bretton Woods Institutions and the Main Features of the International Financial System They Brought About

Year 2008, Volume: 40 Issue: 57, 155 - 192, 07.12.2011

B. Sayın

Abstract

The Birth and Pecularities of the Bretton Woods Institutions and the Main Features of the International Financial System They Brought About

Abstract

In July 1944, a New England resort hotel in Bretton Woods witnessed the birth of the International Monetary Fund and the International Bank for Reconstruction and Development mainly as a result of a bilateral agreement between the United States and United Kingdom. The primary functions foreseen for both institutions had their roots in the political and economical developments that had been experienced by the founder countries. The Fund’s responsibility was to restrain the disorder that surfaced in the monetary system with the abandonment of the gold standard while the Bank was expected to assist in the reconstruction of the war-torn Europe. However, after 65 years, the mandates of both institutions not only broadened but also converged raising questions about their relative roles and their necessities for the new world order. This paper aims to examine the structure, formation and inter-relations of IMF and World Bank while exploring the financial, monetary and political environment that required the substitution of the International Gold Standard with the Bretton Woods system, a system brought about by the formation of these institutions. In the first part, the main motives behind the formation of a single international monetary system built on two inter-governmental institutions is discussed while a historical assessment and a brief description of the features of the International Gold Standard along with its characteristics are presented within. The second part is about the structure and the recent overlapping of the tasks of IMF-World Bank and focuses on their mandates as well as their inter-relations. Their new lending policies and the introduction of new lending instruments are also discussed albeit not to a great extent. 

Keywords

Pecularities, Bretton, Woods

References

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