Perhaps as a reflection that the World Bank had maintained more relevance over the past decade than the IMF, the G20 did not expand its role as significantly. There were, however, changes made to the World Bank. The first step was to lessen the influence of the United States on the institution, which had been dominated by the Americans since its inception. More power was given to emerging economies such as China with respect to how the World Bank is governed. The Bank was given $250 billion to help provide trade finance and additional development funding (Miller & Kennedy, 2009).
Of interesting note is the potential for dramatic shift in the role of the World Bank. Traditionally run by Americans along American fundamental principles, the latest developments are pushing the World Bank to become a more globally-minded entity. The increasing power handed to the world's emerging economies signals a fundamental shift in thinking with respect to global institutions (Authers, 2009). The mandate for the World Bank will inevitably shift as a result of increasing influence of non-American viewpoints. Many of the same countries who will now exert more control over the World Bank were at one time recipients of World Bank development funding, so their perspectives based on that experience will color Bank policy in future. As yet, however, the specific roles that will be assigned to the bank are unknown. What is known is that the $250 billion infusion of cash is a clear signal from the international community that the World Bank still has some relevance and will be called upon to contribute a greater role in the world economic system going forward.
Conclusion
The World Bank and IMF were created in the wake of World War Two and the economic chaos of the between-war period. They were among a series of institutions (the WTO and the partial demise of the gold standard among them) that were initiated in order to stabilize the global economic system. Since that time, the world has changed significantly and the roles of the IMF and World Bank have changed as well. The two institutions are designed to complement one other, but goal confusion at times led them to duplicate services and objectives. As the world's poorest economies began to develop, the number of potential customers for IMF and World Bank services decreased significantly. Significant criticism has been leveled at the institutions for the terms demanded in exchange for emergency loans or development funds. As a result, the two institutions have spent the better part of this decade searching for a restoration of relevance.
The global financial crisis appears to have been the catalyst for this change. Not only has the crisis increased the need for IMF assistance, something that had been declining during the boom years in the middle of this decade, but the crisis has pushed the world's leaders into action. In a repudiation of the trend towards deregulation in the banking industry, the G20 leaders have created new roles for the IMF in terms of global financial governance. As a result, the IMF is poised for revitalization. Moribund just a few months ago, the IMF is now set to receive $750 billion in new funding and a broad change in mandate. Once given the task of facilitating economic development, the IMF is now charged with the stability of the world's financial system.
The role of the World Bank going forward has seen a less dramatic shift. This is due in part to the fact that the World Bank's traditional role as a source of development aid has positioned it for steady demand for the next several decades, thus the World Bank entered this year with more relevance than did the IMF. As a result, the World Bank is going to receive more funding but its role will not change substantially.
Within the framework of an emerging system of global government, the IMF is clearly being positioned as a supreme regulator. The World Bank's role as yet is less well-defined. The new system is emergent, and it may yet fade from prominence in international discourse as the financial crisis fades but for now it appears to be the start of a greater trend. The World Bank is expected to receive a greater role in the coming years. This will be especially evident if its current mandate declines in importance the way that many of the IMF's original mandates have. There is certainly room for an expanded World Bank within an overarching global governance framework. How that manifests in policy remains to be seen, but it is clear that these formerly moribund entities have now been handed the relevance for which they have spent the past several years searching.
Works Cited:
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Jasper, William F. (2009). Global Fusion: The G20, IMF and World Government. New American. Retrieved April 17, 2009 from http://www.thenewamerican.com/economy/commentary-mainmenu-43/1004
Fitzpatrick, Colleen. (2007). Experts Warn IMF Might be "Slipping into Obscurity," Offer Options for Reform. Centre for Global Governance Innovation. Retrieved April 17, 2009 from http://www.igloo.org/community.igloo?r0=community&r0_script=/scripts/announcement/view.script&r0_pathinfo=%2F{7caf3d23-023d-494b-865b-84d143de9968}%2FAnnouncements%2Fpressrel%2Fexpertsw&r0_output=xml
Miller, Rich & Kennedy, Simon. (2009). G-20 Shapes New World Order with Lesser Role for U.S., Markets. Bloomberg. Retrieved April 17, 2009 from http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=axEnb_LXw5yc
Raum, Tom. (2009). G-20 Leaders to give $1 Trillion to IMF, World Bank. Huffington Post. Retrieved April 17, 2009 from http://www.huffingtonpost.com/2009/04/02/g20-leaders-to-give-1-tri_n_182303.html
Take Heed from the G20's Emerging Focus John Authers. Financial Times. London (UK): Apr 4, 2009. pg. 16
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