World BankCREATION:• In 1944, President Roosevelt hosted a conference here, to rebuild the world economy, after Second World War. Delegates of 44

allied nations (मि�त्र राष्ट्र) had came to participate in this conference. Officially it is known as United Nations Monetary and Financial Conference, commonly known as Bretton Woods because of the place where it was held.

• Results of the Brettonwoods Conference:1. IMF2.World Bank3.GATT(now WTO)4.Fixed ER system(Dismantled)

IMF and WB are also known as Brettonwoods Twins.

About WB

It is an International financial institution that provides loans to the developing countries for various capital programmes.• World bank comprises of 2 Institutions:

1. IBRD2. IDA

• Official Goal of WB: Reduction of poverty

IMF• It promotes monetary cooperation internationally and offers advice and assistance to facilitate building and

maintaining a country economy.

• IMF often provides short termed loans loaded with no. of terms and conditions to help nations to settle out their BoP crisis.

• All members of the IMF are also International Bank for Reconstruction and Development (IBRD) members and vice versa.

• At present 188 members in total associated with IBRD as well as IMF.

Diff b/w World Bank and IMF• World bank is all about growth via infrastructure developmental projects in the developing world whereas

IMF is about stabilization of economy via balancing the country international financial system for both rich as well as poor nations. WB is like a GYM TRAINER that gives you stuff to grow strong whereas IMF is your doctor in the emergency ward brings back to your smooth life and advice not to do it again.

• World Bank is a bank. Meaning it borrows money from investors around the world and then lends to the poor governments that are building projects that help to get out of their poverty levels.IMF is a fund. Meaning it has a pool of money given to it by the member countries in the past and just lends out of that fund. It doesn't usually borrow new money.

• IMF is comprised of four key credit lines:1. FCL (Flexible Credit Line):usually given to countries well before they get into a problem.2. PLL (Precautionary Lending):countries that are beginning to get weak. 3. SBA (Stand By Arrangement):countries that are quite weak, but can be rescued quick.4. EFF (Extended Fund Facility):countries too screwed up and requiring a long term help.

• World Bank is a much bigger institution and has two arms:1.IBRD(International Bank for Reconstruction and Development): This is the bank body of WB that charges a slightly higher interest rate on its borrowings and it is mainly for profitable commercial projects [such as roads and dams]. This interest is still a lot lower than what the governments can get from anywhere.

2.IDA(International Development Association): This is a grant body. Here interest is not charged and usually countries are given long periods for repaying. It focusses on social projects such as immunization, health and education. This is however open only for the poorest nations.

SDR/XDR(Special Drawing rights)• SDR’s are often referred as IMF’s Currency.

• Value of an SDR= Avg Value of fixed amount of {Japanese Yen+ British Pound+ Euro+ U.S. Dollar} expressed in dollars in terms of current ER .

• The composition of basket is altered after every 5 yrs. to reflect changes in the importance of different currencies in the world trading system.

Floating ER SystemIn 1973,world moves to Floating ER system.What is Floating Exchange rate?Governments / Central Banks don’t fix exchange rates. It is left to the Forex markets, private players and laws of supply and demand. Government /RBI will only intervene if there is huge fluctuation in the exchange rates.

Source: http://mrunal.org/2012/10/economy-bretton-woods-fixed-exchange-rate-system-imf-world-bank-meaning-explained.html