The foundations of the International Monetary Fund (IMF) and the World Bank are based on the theory that economic success leads to political stability and the end of global war. To help develop this economic success, the International Monetary Fund (IMF) and the World Bank were created.

Both organizations were designed with the goal of creating prosperity for all people.

The International Monetary Fund describes itself as "an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty" (source: www.imf.org). With the exception of North Korea, Cuba, and three other small nations, all member countries of the United Nations participate in the IMF in some way.

The IMF was created to prevent economic instability and depression, such as the Great Depression of the 1930s. Members with problems in their balance of payments may request loans and/or help with the management of their economies. In return, they must undergo reforms to prevent further financial crises. These loans are frequently part of what is called a structural adjustment or poverty reduction strategy based on the conditions outlined by the Washington Consensus. The Washington Consensus is a list of economic reforms a country must undertake if it wants a loan. These include things such as privatizing government-run industries, deregulating industries, and liberalizing trade.

Although many nations belong to the IMF, developed nations control it. The executive of the IMF (the people who make decisions) are appointed based on how much money the nation has contributed. In other words, the wealthier nations, including the European Union, United States, and Canada, have the greatest influence. The president is always a citizen of Europe.

Examples of the IMF Action

• $500 million US to help Turkey recover from an earthquake in 1999
• $128 million US to support Sri Lanka after the 2005 tsunami
• $13 million US to help the Congo recover from civil war in 2000
• Extended loan periods and provided support for Dominican Republic and Madagascar as they recovered from trade liberalization in the textile industry

The World Bank

The World Bank consists of five different agencies that provide advice and financial assistance to needy countries.

It was created for the purpose of reconstructing cities and industries damaged during World War II. Its first and largest loan was to France immediately after World War II to help with reconstruction of the country. Its stated purpose today is "to improve the quality of life and extend economic benefits and empowerment broadly throughout societies". To do that, it conducts research and provides technical and policy advice and loans to needy countries. It has also provided loans to former communist countries, such as Georgia, as they make the transition to capitalism.

The World Bank provides loans and advice to developing countries in the areas of human development, environmental protection, and governance.

Under the Washington Consensus, loans or grants for specific projects are often conditional on the country adopting capitalist policies, including greater free trade and privatization of government-owned or controlled industries and resources. In 2017, the World Bank provided $42.1 billion U.S. in loans to its client countries. It works in more than one hundred developing economies with the primary focus of helping the poorest people and the poorest countries. (Source: World Bank)

Gradually the World Bank has become one of the most highly regarded financial institutions in the world, providing

• research on development-related topics, including environmental impact studies of its projects

• expertise on international development

• long-term assistance to nations all over the world in thousands of different projects

• evaluation of the success of its programs on an ongoing basis

• many transparency and accountability measures so people can see who benefits and who is responsible for its actions

Developed nations have control of the World Bank. They pay the most into the bank and control its decisions. The president is always a citizen of the United States who is appointed by the President of the U.S. The United States has the most seats and effectively can veto (block) any major decisions.