1.

What is the relevance of IMF, World Bank, and General Agreement on

Tariffs and Trade (GATT) to the global economy?

The International Monetary Fund (IMF) is an international organization of 189

member countries that works to ensure the stability for the international monetary and
financial system. IMF’s mandate includes facilitating the expansion and balanced
growth of international trade, promoting exchange stability, and providing the
opportunity for the orderly correction of countries’ balance of payments problems. The
IMF was established in 1945. The World Trade Organization (WTO) is an international
organization of 164 members that deals with the rules of trade between nations. With
Russia’s accession in August 2012, the WTO encompasses all major trading
economies. The WTO works to help international trade flow smoothly, predictably, and
freely, and provides countries with a constructive and fair outlet for dealing with disputes
over trade issues. The WTO came into being in 1995, succeeding the General
Agreement on Tariffs and Trade (GATT) that was established in 1947. The work of the
IMF and the WTO is complementary. A sound international financial system is needed
to support vibrant international trade, while smoothly flowing trade helps reduce the risk
of payments imbalances and financial crisis. The two institutions work together to
ensure a strong system of international trade and payments that is open to all countries.
Such a system is critical for enabling economic growth, raising living standards, and
reducing poverty around the globe.

Promoting economic stability is partly a matter of avoiding economic and financial

crises, large swings in economic activity, high inflation, and excessive volatility in foreign
exchange and financial markets. Instability can increase uncertainty, discourage
investment, impede economic growth, and hurt living standards. A dynamic market
economy necessarily involves some degree of volatility, as well as gradual structural
change. The challenge for policymakers is to minimize instability in their own country
and abroad without reducing the economy’s ability to improve living standards through
rising productivity, employment, and sustainable growth. Economic and financial
stability is both a national and a multilateral concern. As recent financial crises have
shown, economies have become more interconnected. Vulnerabilities can spread more
easily across sectors and national borders.

The IMF helps countries implement sound and appropriate policies through its
key functions of surveillance, technical assistance, and lending. The IMF promotes
economic stability and global growth by encouraging countries to adopt sound economic
and financial policies. To do this, it regularly monitors global, regional, and national
economic developments. It also seeks to assess the impact of the policies of individual
countries on other economies.

The world bank and IMF seem to come hand in hand but they’re two different
institutions even if they share the same members. Countries get into the IMF then join
the World Bank. They formed in 1944, to help countries recover from WWII. New
members are added all the time. Why joining? Well, it opens doors to financing, advice,
and last resort bail-outs. The IMF works with governments on macroeconomic issues,
inflation, growth rates, how to get the money flowing. The world bank, on the other
hand, focuses on what to do with the money? It gives technical help on projects and
helps improve specific sectors. Both give our loans but for different purposes, the IMF
loans money to crisis-hit countries to give them breathing room to recover. The world
bank loans money to countries for long-term projects that ease poverty. Sister
institutions, complementary goals.

We see every day how events in one country can spill over to neighbors, across
continents, to the whole world. A trade disruption can raise the cost of food in a
neighboring country or affect supplies on a distant continent. When one country raises
interest rates, the cost of borrowing to buy a car or a washing machine could go up
somewhere else. The job of the IMF is to spot such risks and help address them. How?
Every year, a team from the IMF visits just about every one of its 189 member
countries. The team talks to the government central bankers, and important actors in
the local economy, such as labor and business leaders, academics, activists, and
students. It looks at how the country can promote growth and stability, or prevent
financial crisis, and ultimately improve people’s lives. That information goes into a
report, a kind or economic health check. These reports are like puzzle pieces that fits
together to form a picture of our global economy. The global picture allows a country to
share its experience while also benefiting from the knowledge of other members. It also
allows the IMF to identify risk and warn governments to take action. And with this
information, we can make recommendations that will benefit the individual country, the
region, and the world.

The International Monetary Fund, World Bank, and General Agreement on Tariffs
and Trade all come hand-in-hand to help boost the development of the global economy
providing doors to more opportunities to its citizens. With only one of them missing the
global economy would surely suffer affecting the lives of many. Economy is very
important especially during this modern age, with more and more advancements in
technology also aids in eradicating poverty as well as developing countries modernize
itself within the 21st century standards.

2. How did the International Monetary System advance the economic

globalization?

Economic globalization is defined as a process making the world economy an

“organic system” by extending transnational economic processes and economic
relations to more and more countries and by deepening the economic
interdependencies among them.

The international monetary system a group of organizations that govern the

exchange rates of currencies. It should provide means of payment acceptable to buyers
and sellers of different nationalities, including deferred payment. To operate
successfully, it needs to inspire confidence, to provide sufficient liquidity for fluctuating
levels of trade, and to provide means by which global imbalances can be corrected. The
system can grow organically as the collective result of numerous individual agreements
between international economic factors spread over several decades. Alternatively, it
can arise from a single architectural vision, as happened at Bretton Woods in 1944.
 The international monetary system of IMS allows countries and companies to do
business across borders. But with more money moving around faster than ever before
these crucial links are becoming strained. We have global financial markets but not
effective way on managing them. The US dollar and US institutions dominated these
financial links for the world. But in the last decade, Europe created a new international
currency and the fast-growing markets including Brazil, India, and China have
transformed the world economy so much that the existing system has reached a
breaking point. The global financial system is undergoing a profound transformation
driven by regulatory change, monetary policy, technological change, and shifts in
customer habits and needs. This opens up a set of opportunities and challenges. The
IMS has indefinitely advanced the global economy but there are still countries
experiencing such financial crisis lacking behind in these developments compared to
developed countries globally.