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  • If you're confused by the difference between the

  • International Monetary Fund, the IMF, and the World Bank. Well, you're not the only one.

  • Famed economist John Maynard Keynes, who was a founding father of both institutions,

  • said that he was confused just by their names.

  • The IMF and World Bank are closely linked.

  • So close that their headquarters are across the street from each other here in Washington.

  • So what's the difference between them?

  • It all started at this hotel in New Hampshire in July 1944,

  • where 44 countries gathered for the Bretton Woods Conference.

  • The goal of the conference was to agree on a new framework for the international monetary system,

  • which is the rules and institutions that keep the global economy running smoothly.

  • After World War II, most people agreed that the old system had failed.

  • It had seen the Great Depression, unfair trade policies and unstable currencies.

  • After three weeks of heated negotiations at Bretton Woods, especially between Keynes

  • who was representing the United Kingdom and Harry Dexter White,

  • the U.S. Treasury representative, a deal was reached.

  • The agreement created the IMF and the International Bank for Reconstruction and Development,

  • soon to be known as the World Bank. Each institution was given a distinct role.

  • The IMF's job was to oversee a system of fixed exchange rates, which tied the value

  • of a country's currency to the U.S. dollar, which was pegged to gold.

  • The main purpose of this was to make sure exchange rates stayed stable to encourage global trade.

  • The IMF was also tasked with providing short-term loans to countries struggling to pay their debts.

  • Meanwhile, the main goal of the World Bank was to give financial assistance to countries,

  • mainly in Europe, that needed to rebuild after the war.

  • The roles of both the IMF and the World Bank have changed a lot since the days of Bretton Woods.

  • President Nixon unpegged the U.S. dollar from gold in 1971,

  • essentially dissolving the fixed exchange rate system that the IMF oversaw.

  • Since then the IMF has taken on a bigger role fighting financial crises around the world.

  • It keeps tabs on the global economy and puts economic policies in place in member countries.

  • The World Bank focuses its efforts on development and reducing poverty.

  • It provides funding and resources in projects in some of the poorest countries in the world.

  • Both institutions include 189 member countries but the IMF has around 2,700 employees,

  • compared to the World Bank's staff of 10,000.

  • The IMF is funded mainly by quotas, basically subscription fees, from member countries.

  • It receives about $675 billion in quotas, with the U.S., Japan, China and Germany contributing the most.

  • The World Bank is financed mostly by issuing bonds to global investors.

  • The group's lending commitments reached nearly $59 billion in fiscal year 2017.

  • The IMF has committed $160 billion under its current lending arrangements.

  • Today the IMF's biggest borrowers include Greece, Ukraine, Portugal and Pakistan.

  • The places where the World Bank is running the most projects are in Africa and East Asia.

  • One thing the IMF and World Bank have in common is that they both have some opponents.

  • Critics point to the conditions attached to their loans, saying they don't always address

  • the specific economic issues within a country.

  • The IMF has come under fire for continuing to bail out Greece

  • even as the country has failed to clean up its finances.

  • Human rights groups have criticized the World Bank for ignoring the environmental and social impacts

  • of some of its projects in countries like Ethiopia or Myanmar.

  • But the IMF and World Bank say they promote global economic stability, they make countries less

  • vulnerable to crises, promote higher living standards and provide vital help to countries that need it.

  • Hey guys, it's Elizabeth.

  • Thanks so much for watching!

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  • Bye for now!

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