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

There are many important financial institutions that operate for the economic developments throughout the world. Among these, there are two institutions named as IMF and World Bank created by John Maynard Keynes; a great economist of 20th century, in U.S.A with 44 nations in July 1944. These institutions jointly identified as Bretton Woods Institutions. Both of the institution have a keen interest in economic issues of world and deliberately put their efforts to increase the economic strength of members’ nations. The head quarter of both institutions is 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 raises adjusted development related to world trade, decreases restrictions on trade, makes exchange rates stable, avoids the currency devaluation and gives remedy for balance-of-payment issues. The IMF’s objective is to prohibit and find solution of worldwide budgetary crises by urging nations to keep up sound financial approaches.

World Bank:

The World Bank is a worldwide money related foundation devoted to decrease poverty around the globe through capital speculation and trade facilitation.

Bank for International Settlements

The Bank for International Settlements is abbreviated as BIS. Its aim is to foster international monetary and financial cooperation. It serves as a bank for central banks.

IMF vs. World Bank vs. BIS

There are some differences among IMF and World Bank which are explained as follows:

  • Purpose:

The main purpose of IMF is attempting to encourage worldwide money related collaboration, secure monetary strength, encourage international trade, and advance 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 programmes 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 comes from 182 member nations.

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.

World Bank assists only developing countries by providing them long term financial loans for the 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.

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

World Bank is actually a bank. That explains that it can borrow and also lend the money. A bank borrows new money from the investors in the world and lend out the money to the countries having poor government 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 head quarters 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 as 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 to the central banks.

  • Resources:

IMF has notable resources currently valued 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 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 freedom to get monetary help from 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.

Conclusion:

IMF and World Bank play a significant role in development of developing nations. From 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 for maintaining the financial stability of the whole world. Which is better in your opinion?