How is the world's financial system governed? - The Global Challenges Foundation

Facing global challenges the world's financial system could provide resilience, or be a part of its downfall. How much do you actually know about how money and finances are governed?

By Rafael Matsunaga - Flickr, CC BY 2.0

In July 1944, 730 delegates from 44 nations gathered at the Mount Washington Hotel in New Hampshire USA to regulate the world’s monetary and financial order. What did they decide to do?

By rickpilot_2000 from Hooksett, USA - Mt. Washington HotelUploaded by jbarta, CC BY 2.0

Currency exchange rates were pegged to gold, and made convertible. The conference also established the International Bank for Reconstruction and Development (IBRD) and the International Monetary Fund (IMF).

A global agency responsible for central economic planning was formed, the World Planning Committee, modeling the Soviet Union's.

To establish the International Trade Organization (ITO) regulating global trade and to create a supranational currency, the bancor, which is used in international trade.

To create Project Cybersyn, an economic simulator with custom written software to check bank performance around the world.

Stable monetary relations is the main goal of the IMF. What are the key functions of the IMF, in order to achieve its goal?

By International Monetary Fund - Public Domain

Assessing economic, monetary, and fiscal exchange.

Loans to member countries with balance of payments problems.

Technical assistance in the management of member countries’ fiscal problems.

All of the above

How are decisions made by the IMF?

By International Monetary Fund - Public Domain

The world’s two largest economies, the United States and China, have veto power.

Member states have a vote according to their quota, namely how much they contribute to the IMF’s capital.

By vote of the 189 member countries. One country, one vote, a simple majority wins.

The members can buy and sell shares in the IMF. The more shares, the more votes, just like in any bank.

The International Bank for Reconstruction and Development (IBRD) has grown since being instituted by the Bretton Woods conference. IBRD is now part of a much larger bank entity. Which is it?

The US Federal Reserve.

The World Bank Group.

The United Nations Savings & Loans Bank.

The Financial Stability Board

Compared to the IMF, how are decisions made in the World Bank Group?

By Shiny Things - Flickr, CC BY 2.0

By vote of the member countries. One country, one vote, a simple majority wins.

The world’s two largest economies, the United States and China, have veto power.

Member states have a vote according to their quota, namely how much they contribute to the World Bank Group’s capital.

The members can buy and sell shares in the World Bank. The more shares, the more votes, just like in any bank.

On 16 January 2016 the Asian Infrastructure Investment Bank opened up for business. What is the AIIB?

Av Asian Infrastructure Investment Bank - Original Source: aiib.org, Public Domain

It is currently the biggest state-owned commercial bank in China.

A multilateral development bank proposed by China, that aims to support the building of infrastructure in the Asia-Pacific region.

An offshoot of the Asian Development Bank, a regional development bank originally established on 19 December 1966.

A collective fund instituted by the five largest Asian countries for building roads across borders.

How are decisions made in the AIIB?

By N509FZ - Own work, CC BY-SA 4.0

By vote of the member countries. One country, one vote, a simple majority wins.

The world’s two largest economies of the AIIB, China and India, have veto power.

Member states have a vote according to their quota, namely how much they contribute to AIIB’s capital.

Members receive graded shares when they enter the AIIB. The more shares, the more votes, just like in any bank.