Difference between IMF and World bank
Difference between IMF and World bank

Many important financial institutions operate for economic development throughout the world. Among these, there are two key institutions named as IMF and the World Bank created by John Maynard Keynes; a great economist of 20th century, in US with 44 nations in July 1944. These institutions jointly identified as the Bretton Woods Institutions. Both of the institutions have a keen interest in the economic issues of the world and deliberately put their efforts to increase the economic strength of their members’ nations. The headquarters of both institutions are located in Washington D.C. The Bank for International Settlements (BIS) is an international financial institution owned and operated by central banks.

International Monetary Fund (IMF):

The International Monetary Fund (IMF) is the focal establishment that provides the worldwide money related framework and promotes adjusted development related to world trade, decreases restrictions on trade, stabilizes exchange rates stable, prevents currency devaluation, and provides remedies for balance-of-payment issues. The IMF’s objective is to prevent and find solutions of worldwide budgetary crises by urging nations to adopt sound economic policies.

World Bank:

The World Bank is a worldwide money related foundation devoted to decrease poverty around the globe through capital speculation and trade facilitation. It primarily supports the economic development of lower-income countries through long-term funding.

Bank for International Settlements

The Bank for International Settlements is abbreviated as BIS. It aims to foster international monetary and financial cooperation. It serves as a bank for central banks, promoting stability through global collaboration and policy coordination.

IMF vs. World Bank vs. BIS

There are some differences between the IMF and the World Bank, which are explained as follows:

Purpose:

The main purpose of IMF is attempting to encourage worldwide monetary cooperation, secure monetary strength, encourage international trade, and achieve high level of employment and practical financial development, and decrease poverty around the globe.

While the main concern of World Bank is to raise financial and social advancement in developing nations by helping them to increase their efficiency and productivity so that their public may carry on with a superior and better life.

BIS’s purpose is to act as a bank for the central banks. It works by holding congregations and programs for international groups pursuing global financial stability. It works as a facilitator of interaction between international financial organizations.

Staff:

IMF has a small staff based on 2300 workers from 182 member nations.

The World Bank has a large staff having 7000 workers from 180 member nations.

BIS has members. These members are 62 central banks and monetary authorities. These 62 members have a right for voting and representation at general meetings.

Assistance:

IMF gives help to all members either industrial or developing countries to find out the problem in balance of payment by giving short or medium term loans.

The World Bank assists only developing countries by providing them long term financial loans for development programs and projects.

BIS provides assistance to central banks, major financial institutions and private individuals in terms of monetary help and settlement of finances.

Bank or Fund:

IMF is actually a fund. That means it does not borrow money, it just lends the funds to 182 member nations.

The World Bank is actually a bank. That explains that it can borrow and also lend money. A bank borrows new money from the investors in the world and lend out the money to countries having poor governments for their development projects and to reduce poverty.

BIS is a financial institution acting as a bank for international financial groups and central banks.

Structure:

The structure of IMF is not very complex as its most of the staff worked at headquarters whereas it has small offices in Geneva, Paris and in New York, United Nations.

The World Bank structure is somehow complex as compare to IMF. It constitutes two main organizations named as the International Development Association (IDA) and International Bank for Reconstruction and Development (IBRD).

BIS’s headquarters are situated at Basel, Switzerland. It was established on 17 May 1930. It is an international financial institution that maintains cooperation between 62 central banks.

Working:

IMF is not called a Bank; so, it does not work between borrowers and investors.

The World Bank can be named as investment bank, it works between investors and borrowers, receiving from one nation and giving to the other.

BIS is an international financial organization. It is a bank for the central banks.

Resources:

IMF has notable resources currently valued at more than $215 billion.

The owners of World Bank are governments of their 180 member countries having equity shares that were valued $176 billion in 1995.

BIS has its reserve in the IMF special drawing rights. Its balance sheet on 31 March 2019 was 403.7 billion US dollars.

Receivers:

Both poor and wealthier member countries have the freedom to get monetary help from the IMF.

Wealthier nations or private individuals don’t have any right to get assistance from World Bank as it gives loans to only credit-worthy nations. The countries which are poor are more likely to get loan from World Bank. Those countries can receive fund from IBRD whose per capita GNP is more than $1305.

BIS works as an emergency funder for nations in trouble. It provides emergency funding through the IMF program.

Global Finance Giants: Understanding the IMF, World Bank, and BIS

The world’s financial stability does not happen by coincidence. Behind the scenes, bodies like the IMF, World Bank, and the BIS significantly shape economies as well as assist countries in their ability to pass through financial shocks.

The IMF is a type of financial doctor for countries. When countries have a balance of payments crisis or currency imbalance, the IMF steps in with short-term financial support and policy advice. It’s a matter of keeping the global economy healthy and inducing balanced trade between countries.

And then there’s the World Bank, less crisis, more sustained development. It invests in massive infrastructure projects in poorer countries: roads, schools, and hospitals. Its mission? Eradicating poverty and improving living standards by helping countries become stronger from the grassroots.

BIS, though lesser known, is the central bank of central banks. Located in Switzerland, it does not lend to governments directly. Instead, it assembles the world’s top financial policymakers and provides them with the opportunity to cooperate and share policies to keep the global monetary system running.

Each one performs a unique function. The IMF reacts to crises, the World Bank builds for tomorrow, and BIS helps the gatekeepers of the world’s finance.

Together, they are the backbone of global finance, keeping out of sight yet keeping out of trouble to prevent collapses, stabilize markets, and build a better tomorrow.

Understanding how they vary helps us value the complex machinery of international economics. After all, every stable nation in existence now has, at one time, depended on one of these behemoths.

Conclusion:

IMF and World Bank play a significant role in the development of developing nations. With their help, countries can achieve financial and economic strength to run their country. BIS, located in Switzerland, is a bank for central banks. It is one of the oldest global financial institutions. It operates for the cooperation of central banks and also to ensure global monetary and financial stability. It works under the auspices of international law. All these banks and financial institutions work to maintain the financial stability of the whole world. Which is better in your opinion?