Both the International Monetary Fund, or IMF, and the World Bank were formed together at Bretton Woods, New Hampshire, in July 1944. They were created to support the world economy although they each perform different roles. The IMF exists to preserve an orderly monetary system; the World Bank performs an economic development role. Both organizations have their headquarters in Washington, D.C.
The IMF supervises the economic policies of its members and expects them to allow free exchange of national currencies. To keep this financial order, the IMF also acts as a provider of emergency loans to members who run into difficulties, in exchange for a promise from the member to reform its economic policies.
The World Bank finances economic development among poorer nations by funding specific and targeted projects, aimed at helping to raise productivity. The World Bank consists of two organizations: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The IBRD lends to developing nations at preferential interest rates, while the IDA only lends to the poorest nations, on an interest-free basis.
The IMF employs about 2,400 people, around half of whom are economists. Most IMF employees work in Washington, D.C., with others operating in member countries around the world. In contrast, the World Bank employs around 10,000 people in more than 160 countries, performing such diverse roles as economists, scientists, analysts, I.T. specialists and engineers. Two-thirds of World Bank employees are based in Washington, D.C., while the rest operate around the world.
Although the IMF is an agency of the United Nations, it has its own charter, structure and financing arrangements. The IMF not only works with its 187 members, it also collaborates with the World Bank, World Trade Organization and agencies of the United Nations. To become a member of the IMF, countries must apply and be accepted by the other members.
Because membership of the World Bank is conditional on being a member of the IMF, the World Bank also has 187 members. These members govern the World Bank through a Board of Governors. As well as working with developing countries on individual projects, the World Bank also works with various international institutions, along with professional and academic bodies.
The IMF raises its money through membership fees, known as quotas. Each member country pays a quota based on its relative economic size so that the larger economies pay more. The World Bank raises most of its money through borrowing, by issuing AAA-rated bonds to investors; it also receives grants from donors.
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