The International Monetary Fund, IMF, and the World Bank are the result of the international economic convention of 1944, which aimed at establishing financial cooperation around the world. Although the two institutions originated with the same general goal of maintaining the global economy, their functions have been evolving over the years. The IMF primarily consists of economists from a wide range of macroeconomic backgrounds and aims to preserve financial stability worldwide. To that accord, it provides loans to countries in need, which are usually funded by the IMF’s members. As can be seen, the IMF is mainly concerned with short and medium-term solutions, facilitating international trade, and maintaining economic growth.
The World Bank, on the other hand, focuses on the long-term strategies for global economic stability and development. A large proportion of its staff are specialists in particular sectors of the economy, helping the global community design and implement various projects. For example, the World Bank, through the use of its members’ contributions and bond issuances, might assist states in building schools and health centers (“The IMF and the World Bank,” 2021). Therefore, the roles of the IMF and the World Bank differ, but their goal of global economic stability is the same, and the two work together to maintain economic prosperity in global trade.
The two institutions affect the foreign exchange rates by maintaining political and economic stability. Other factors that influence the foreign exchange rate include the current account of different global states, government debt, terms of trade, recession, speculation, inflation and interest rates. IMF and the World Bank provide support, mainly financial, to the countries in need, in order to sustain the global economy at an adequate level.
The IMF and the World Bank. (2021). International Monetary Fund.