The Bretton Woods institutions were set-up in 1944 after the 2nd World War. The 2nd World War saw massive economic and infrastructural damage to Europe. To help Europe recover from this difficult situation, the Bretton Woods institutions were created. These institutions basically consisted of two major bodies the IMF and World Bank and had the strong arm of the American economy behind their creation Another reason fortheir creation was that it was also recognized after the Great Depression of the late 20’s that if one major national economy was suffering it would hurt the global economy in general.
The World Bank as it is known now was created as the International Bank of Reconstruction and Development. The major purpose of this institution was to help finance the development of infrastructural projects like dams, roads and highways amongst others.
The basic objectives of the IMF include the promotion of international money cooperation, facilitating international trade and maintaining exchange rate stability.
It is important to recognize the role that the IMF played in the debt crises in the 1980’s. The reality was that rather then actually dealing with the core financial problem, it deferred the impact of the debt crisis actually managing to exacerbate the issue.
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