DVM 2105 Lecture Notes - Lecture 15: International Monetary Fund, Harry Dexter White, Bretton Woods Conference
20 Aug 2016
School
Course
Professor
DVM 2105
December 1st 2015
International Financial Institutions
-have been created in the States, subjects in international law
-post WWII 2 institutions were created:
-UN; responsible for national peace and security
-BW; responsible for international political economy
-Bretton Woods Conference in New Hampshire in 1944
-aim was to create the new post war international economic system
-system that specifies details of national political economy in post WWII
-designed by creating a mixed model of structures for economic activity
-prevent events that led to the first and second world war (gold exchange standard, floating
exchange rate, bilateralism and exchange rate)
-post development scholars or other schools of thought agree this system is responsible for
most inequalities and poverties because it was created by the Western countries
-associated with this system a number of discussion about how these institutions distribute
their money
-BW conference gave birth to:
-World Bank
-International Bank for Reconstruction and Development (IBRD)
-the General Agreement on Tariffs and Trade (GATT)
-the International Monetary Fund (IMF)
-Bretton Woods Agreements:
-presented an unprecedented experiment in international rule-making and institution
building (with the creation of WB, IMF, etc)
-must be understood in terms of creating new international roles and institutions
-they were decisive in the reopening of the world economy
-aspiration in the idea of Western countries to reopen the world economic system to the
free exchange of goods and services for international transaction
-was needed at the time when fascism collapsed
-they created an entirely new type of open system that the capitalist world had not seen
before
-creation of a harmony between free trade and national economic stability
-unique in its own nature (Keynesian inspired)
-power capabilities: rivalling each other
-US was searching for a free trade system; preferred to create and international system
open to free exchange (everything must be fully open to this freedom of transaction)
-UK was willing to keep their imperial system; interesting in creating bilateral protectionist
policies defined around the imperial system (looking to keep their colonies)
-a new political miracle: dual/embedded liberalism
-the emergence of an intentional policy community
-free market and Keynesianism
-BW system suggested that when economic activities are considered at the international
level, its better to be open to all freedom of exchange; however, within the countries, it was
recommended to design policies that are defined based on interventionist models from the
state (government)
-simple: no gov intervention in international market, yes gov intervention in social welfare
-John Maynard Keynes
-Harry Dexter White
-results of BW system:
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DVM 2105
December 1st 2015
-desirability of currency stability and the convertibility of currencies based on the dollar
-a need for international reserves to hep the balance of payment deficits
-resulting in managing and needing to supervise and control monetary activities of countries
-a need for managing and supervising of monetary and trade policies
-international investment
-capital movement
-exchange rate parities
-commodity prices
-IMF main goal: reaching possibility of world recession
-an international financial institutions created out of the BW conference
-IMF must be analyzed under the banner of the BW system
-purposes: (not on final)
-working to foster global monetary stabilities, secure financial stability
-facilitate international trade
-promote high employment and sustainable growth
-reduce poverty around the world
-exchange rate stability
-short term financing to overcome balance of payment difficulties
-IMF institutional functioning: members pay a quota which constitutes a pool of money
-this determines special drawing rights, voting power on board of directors
-voting power: US 17%, Japan 6%, South Africa 0.87%
-24 executive directors, consensus decision making in shadow of most powerful countries
-IMF and the importance of global economic stability:
-economic and financial crisis
-large swings in economic activity
-high inflation
-excessive volatility in foreign exchange
-IMF’s power:
-borrowing privileges beyond special drawing rights (SDRs); they approve repayment
schedules and plans
-conditionality commonly includes reduction in government expenditure, tightening
monetary policy, eliminating structural weaknesses
-IMF is: high ideological
-conditionality (structural agreements)
-US has determinate influence
-used as a threatening tool
-WB voting power: Us, Japan, Germany, France and UK
-US can effectively veto anything
-WB functioning:
-raises capital on private markets
-offers loans
-US influence comes from US funding, location and education which comes from US
-WB was a tool created to help Western societies reconstruct themselves after war; everything
must be analyzed under the shadow of the benefit toward Western countries
-WB has had many missions: ON THE FINAL
-1944; helping devastated European countries after the war
-development of poor members
-1948; assisting underdeveloped countries; reorientated their mission to poor countries
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find more resources at oneclass.com
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Document Summary
Have been created in the states, subjects in international law. Un; responsible for national peace and security. Bretton woods conference in new hampshire in 1944. Aim was to create the new post war international economic system. System that speci es details of national political economy in post wwii. Designed by creating a mixed model of structures for economic activity. Prevent events that led to the rst and second world war (gold exchange standard, oating exchange rate, bilateralism and exchange rate) Post development scholars or other schools of thought agree this system is responsible for most inequalities and poverties because it was created by the western countries. Associated with this system a number of discussion about how these institutions distribute their money. International bank for reconstruction and development (ibrd) The general agreement on tariffs and trade (gatt) Presented an unprecedented experiment in international rule-making and institution building (with the creation of wb, imf, etc)
