What are the Bretton Woods Institutions?

The World Bank and its sister organization, the International Monetary Fund, were created at
Bretton Woods New Hampshire in 1944. Together they are referred to as the Bretton Woods
Institutions or BWIs.

The World Bank

Originally created primarily to finance the reconstruction of war-torn Europe, the World Bank
has become the primary financier of development projects in the Third World. It has also become
the Third World's largest creditor. Together the countries of the Third World owe the World
Bank more than US$160 billion.

The World Bank is currently the largest multi-national lending and technical agency dealing with
Third World development. As the world~s leading development agency, the World Bank has a
wide-ranging mandate, from consolidating loans for large-scale development projects to
providing structural adjustment loans and sectoral adjustment loans to developing countries
experiencing balance of payments problems.

In the 1970s, under the presidency of Robert McNamara, the World Bank grew dramatically in
size and scope. In the 1980s, in large part owing to the debt crisis, the Bank increasingly served
as a debt-management institution, lending in some cases as much as 50% of a developing
country's portfolio toward structural and/or sectoral adjustment lending. The primary feature of
this kind of lending was to restore a troubled economy's debt servicing capacity by urging
indebted countries to adopt major economic reforms known as structural adjustment programmes
(SAPs).

Why is the World Bank in Need of Reform?

The World Bank's failure to achieve its primary mission of poverty alleviation is now
acknowledged at the most senior levels of the Bank itself, as well as by the Canadian Auditor
General. Evidence of project and portfoli failures have led to increasing calls for a
comprehensive review of the World Bank and the IMF, the most recent call coming from the
countries of the G-7 in the communique from their 1994 Naples summit. The fundamental
reform of the Bretton Woods Institutions (BWIs) is urgently needed.

Over the past decade, the World Bank has come under increasing criticism from a wide range of
groups in the North and South. Environmental groups argue that many World Bank projects have
had a disastrous effect on the environment. The World Bank often finances large infrastructure
projects, including dams, open pit mines, and road construction. In case after case these projects
have been proven economically unsound, have destroyed pristine rainforests, rivers and
estuaries, and have uprooted the livelihoods of millions of Third World citizens who are affected
by them. World Bank-funded development projects have forcibly resettled 2.5 million people
since 1986 alone, and will likely uproot another 2.5 million by the year 2000.
Other groups have been critical of the World Bank's policies of structural adjustment designed to
assist countries in correcting their balance of payments or debt problems. These programmes
have exacted an unacceptable toll on the poor and the environment (see brief on "Structural
Adjustment Programmes". Increasingly, these groups have joined together in the 50 Years is
Enough Campaign to call for the fundamental reform of the World Bank.

The record of the World Bank in financing environmentally and socially destructive projects, as
well as failed adjustment programs insensitive to local realities, is also a serious problem. These
failures were brought to the fore in a recent World Bank review of its projects. The Wapenhans
Report cited a significant deterioration in the overall quality of project lending. Another internal
independent report on the IDA-funded India's Sardar Sarovar dam project noted that the Bank
systematically failed to live up to its own environmental guidelines in evaluating and
implementing the project.

What is the International Monetary Fund?

The IMF's original mandate sets forth three main objectives:

1. To promote international monetary cooperation;

2. To facilitate the expansion of international trade;
3. To promote exchange rate stability.

The IMF achieves these objectives by advising member countries on their economic policies and
by providing conditional assistance to member countries experiencing balance of payments
problems.

The IMF often escapes close scrutiny by groups who tend to focus their advocacy efforts on the
World Bank. Yet, the IMF has played a very significant, if not more important, role in
exacerbating the impoverishment of developing countries. Critics argue that the IMF has strayed
far from its original mandate of providing member countries with funds to alleviate short-term
balance of payments crises and stabilizing exchange-rates. The IMF is increasingly under attack
for its inappropriate role in exacerbating the economic crisis in Africa during the 1980s and for
the fiasco surrounding Mexico's recent collapse.

The IMF played a significant role during the 1980s in "bailing out the commercial banks." By
providing IMF credits to developing countries, essentially to service commercial debt, the IMF
took upon itself the role of "gatekeeper" for creditors, forcing highly indebted countries to adopt
SAPs as a condition not only for receiving IMF credits, but as the "stamp of approval" debtor
countries needed as a condition for receiving further grants and aid from all donor sources.

By disbursing funds to developing countries in the 1980s to service commercial debt, an most
recently to Mexico, the IMF essentially postponed the debt crisis by providing short term funds
on very hard terms for what was essentially a structural problem of insolvency which required
long-term solutions. It is widely believed that the IMF financed the "recovery" with the wrong
resources and the wrong approach. Consequently, the IMF is now in the position of extracting
large net transfers of resources, especially from those countries which can least afford it.
What Changes are Needed to the Bretton Woods
Institutions?
It is now more important than ever to undertake a fundamental review of the policies and
practices of the Bretton Woods Institutions, including projects and programmes, and include a
full financial, social and ecological risk assessment. This review should be broadly based,
including other industrialized countries, the nations of the developing world, and non-
governmental organizations (NGOs).

Restructuring the Bretton Woods

Institutions:
A 10 Point Platform
1. End structural adjustment agreements as presently constituted and participate in
transparent policy dialogues resulting in reciprocal sustainable development
commitments for countries in the north and the south;
2. Halt all funding for environmentally and socially destructive mega-projects and in future
ensure that loans and credits emphasize soft-path lending for people-oriented sustainable
development, focusing on poverty reduction;
3. Use the reserves and profits of the World Bank and IMF (including its gold reserves) to
cancel or substantially reduce debts owed to them by the severely indebted low and
middle income countries;
4. Set in place independent tribunals to arbitrate between creditors and debtors on
appropriate conditionalities for financing debt relief;
5. Democratize and decentralize decision-making rather than weighted voting based solely
on the size of donations;
6. Increase transparency and access to information and carry out participatory evaluation;
7. Increase accountability and liability including taking responsibility for past
miscalculations and imprudent policies and projects;
8. Address the growing magnitude and volatility of world currency markets, with the IMF
playing a role in achieving monetary stability at the international level;
9. Assure regular and full reporting by the Canadian Executive Directors of the World Bank
and IMF to the Canadian Parliament and full disclosure of Canada's voting record;
10. Set in place a truly independent Appeals Commission to oversee the operations of the
World Bank and IMF with binding recommendations.
What is the G-20
The Group of Twenty (G-20) Finance Ministers and Central Bank Governors was established in
1999 to bring together systemically important industrialized and developing economies to
discuss key issues in the global economy. The inaugural meeting of the G-20 took place in
Berlin, on December 15-16, 1999, hosted by German and Canadian finance ministers.

Mandate

The G-20 is the premier forum for our international economic development that promotes open
and constructive discussion between industrial and emerging-market countries on key issues
related to global economic stability. By contributing to the strengthening of the international
financial architecture and providing opportunities for dialogue on national policies, international
co-operation, and international financial institutions, the G-20 helps to support growth and
development across the globe.

Origins

The G-20 was created as a response both to the financial crises of the late 1990s and to a
growing recognition that key emerging-market countries were not adequately included in the
core of global economic discussion and governance. Prior to the G-20 creation, similar groupings
to promote dialogue and analysis had been established at the initiative of the G-7. The G-22 met
at Washington D.C. in April and October 1998. Its aim was to involve non-G-7 countries in the
resolution of global aspects of the financial crisis then affecting emerging-market countries. Two
subsequent meetings comprising a larger group of participants (G-33) held in March and April
1999 discussed reforms of the global economy and the international financial system. The
proposals made by the G-22 and the G-33 to reduce the world economy's susceptibility to crises
showed the potential benefits of a regular international consultative forum embracing the
emerging-market countries. Such a regular dialogue with a constant set of partners was
institutionalized by the creation of the G-20 in 1999.

Membership

The G-20 is made up of the finance ministers and central bank governors of 19 countries:

• Argentina
• Australia
• Brazil
• Canada
• China
• France
• Germany
• India
• Indonesia
• Italy
 • Japan
• Mexico
• Russia
• Saudi Arabia
• South Africa
• Republic of Korea
• Turkey
• United Kingdom
• United States of America

The European Union, who is represented by the rotating Council presidency and the European
Central Bank, is the 20th member of the G-20. To ensure global economic fora and institutions
work together, the Managing Director of the International Monetary Fund (IMF) and the
President of the World Bank, plus the chairs of the International Monetary and Financial
Committee and Development Committee of the IMF and World Bank, also participate in G-20
meetings on an ex-officio basis. The G-20 thus brings together important industrial and
emerging-market countries from all regions of the world. Together, member countries represent
around 90 per cent of global gross national product, 80 per cent of world trade (including EU
intra-trade) as well as two-thirds of the world's population. The G-20's economic weight and
broad membership gives it a high degree of legitimacy and influence over the management of the
global economy and financial system.

Achievements

The G-20 has progressed a range of issues since 1999, including agreement about policies for
growth, reducing abuse of the financial system, dealing with financial crises and combating
terrorist financing. The G-20 also aims to foster the adoption of internationally recognized
standards through the example set by its members in areas such as the transparency of fiscal
policy and combating money laundering and the financing of terrorism. In 2004, G-20 countries
committed to new higher standards of transparency and exchange of information on tax matters.
This aims to combat abuses of the financial system and illicit activities including tax evasion.
The G-20 has also aimed to develop a common view among members on issues related to further
development of the global economic and financial system.

To tackle the financial and economic crisis that spread across the globe in 2008, the G20
members were called upon to further strengthen international cooperation. Accordingly, the G20
Summits have been held in Washington in 2008, in London and Pittsburgh in 2009, and in
Toronto and Seoul in 2010.

The concerted and decisive actions of the G20, with its balanced membership of developed and
developing countries helped the world deal effectively with the financial and economic crisis,
and the G20 has already delivered a number of significant and concrete outcomes:

First, the scope of financial regulation has been largely broadened, and prudential regulation and
supervision have been strengthened. There was also great progress in policy coordination thanks
to the creation of the framework for a strong, sustainable and balanced growth designed to
enhance macroeconomic cooperation among the G20 members and therefore to mitigate the
impact of the crisis. Finally, global governance has dramatically improved to better take into
consideration the role and the needs of emerging of developing countries, especially through the
ambitious reforms of the governance of the IMF and the World Bank.

Chair

Unlike international institutions such as the Organization for Economic Co-operation and
Development (OECD), IMF or World Bank, the G-20 (like the G-7) has no permanent staff of its
own. The G-20 chair rotates between members, and is selected from a different regional
grouping of countries each year. In 2011 the G-20 chair is France. The chair is part of a
revolving three-member management Troika of past, present and future chairs. The incumbent
chair establishes a temporary secretariat for the duration of its term, which coordinates the
group's work and organizes its meetings. The role of the Troika is to ensure continuity in the G-
20's work and management across host years.

Former G-20 Chairs

• 1999-2001 Canada
• 2002 India
• 2003 Mexico
• 2004 Germany
• 2005 China
• 2006 Australia
• 2007 South Africa
• 2008 Brazil
• 2009 United Kingdom
• 2010 Republic of Korea

Meetings and activities

It is normal practice for the G-20 finance ministers and central bank governors to meet once a
year. The ministers' and governors' meeting is usually preceded by two deputies' meetings and
extensive technical work. This technical work takes the form of workshops, reports and case
studies on specific subjects, that aim to provide ministers and governors with contemporary
analysis and insights, to better inform their consideration of policy challenges and options.

Interaction with other international organizations

The G-20 cooperates closely with various other major international organizations and fora, as the
potential to develop common positions on complex issues among G-20 members can add
political momentum to decision-making in other bodies. The participation of the President of the
World Bank, the Managing Director of the IMF and the chairs of the International Monetary and
Financial Committee and the Development Committee in the G-20 meetings ensures that the G-
20 process is well integrated with the activities of the Bretton Woods Institutions. The G-20 also
works with, and encourages, other international groups and organizations, such as the Financial
Stability Board and the Basel Committee on Banking Supervision, in progressing international
and domestic economic policy reforms. In addition, experts from private-sector institutions and
non-government organisations are invited to G-20 meetings on an ad hoc basis in order to exploit
synergies in analyzing selected topics and avoid overlap.

External communication

The country currently chairing the G-20 posts details of the group's meetings and work program
on a dedicated website. Although participation in the meetings is reserved for members, the
public is informed about what was discussed and agreed immediately after the meeting of
ministers and governors has ended. After each meeting of ministers and governors, the G-20
publishes a communiqué which records the agreements reached and measures outlined. Material
on the forward work program is also made public.

FOUR REFROM PILLARS AT THE G 20 SUMMIT IN TORONTO:

The first pillar is a strong regulatory framework. We took stock of the progress of the Basel
Committee on Banking Supervision (BCBS) towards a new global regime for bank capital
and liquidity and we welcome and support its work. Substantial progress has been made on
reforms that will materially raise levels of resilience of our banking systems. The amount of
capital will be significantly higher and the quality of capital will be significantly improved
when the new reforms are fully implemented. This will enable banks to withstand – without
extraordinary government support – stresses of a magnitude associated with the recent
financial crisis. We support reaching agreement at the time of the Seoul Summit on the new
capital framework. We agreed that all members will adopt the new standards and these will
be phased in over a timeframe that is consistent with sustained recovery and limits market
disruption, with the aim of implementation by end-2012, and a transition horizon informed
by the macroeconomic impact assessment of the Financial Stability Board (FSB) and BCBS.
Phase-in arrangements will reflect different national starting points and circumstances, with
initial variance around the new standards narrowing over time as countries converge to the
new global standard.
19. We agreed to strengthen financial market infrastructure by accelerating the implementation
of strong measures to improve transparency and regulatory oversight of hedge funds, credit
rating agencies and over-the-counter derivatives in an internationally consistent and
nondiscriminatory
way. We re-emphasized the importance of achieving a single set of high
quality improved global accounting standards and the implementation of the FSB’s
standards for sound compensation.
20. The second pillar is effective supervision. We agreed that new, stronger rules must be
complemented with more effective oversight and supervision. We tasked the FSB, in
consultation with the IMF, to report to our Finance Ministers and Central Bank Governors in
October 2010 on recommendations to strengthen oversight and supervision, specifically
5
relating to the mandate, capacity and resourcing of supervisors and specific powers which
should be adopted to proactively identify and address risks, including early intervention.
21. The third pillar is resolution and addressing systemic institutions. We are committed to
design and implement a system where we have the powers and tools to restructure or resolve
all types of financial institutions in crisis, without taxpayers ultimately bearing the burden,
and adopted principles that will guide implementation. We called upon the FSB to consider
and develop concrete policy recommendations to effectively address problems associated
with, and resolve, systemically important financial institutions by the Seoul Summit. To
reduce moral hazard risks, there is a need to have a policy framework including effective
resolution tools, strengthened prudential and supervisory requirements, and core financial
market infrastructures. We agreed the financial sector should make a fair and substantial
contribution towards paying for any burdens associated with government interventions,
where they occur, to repair the financial system or fund resolution, and reduce risks from the
financial system. We recognized that there are a range of policy approaches to this end.
Some countries are pursuing a financial levy. Other countries are pursuing different
approaches.
22. The fourth pillar is transparent international assessment and peer review. We have
strengthened our commitment to the IMF/World Bank Financial Sector Assessment
Program (FSAP) and pledge to support robust and transparent peer review through the FSB.
We are addressing non-cooperative jurisdictions based on comprehensive, consistent, and
transparent assessment with respect to tax havens, the fight against money laundering and
terrorist financing and the adherence to prudential standards.

IBSA :

BSA is a trilateral, developmental initiative between India, Brazil and South Africa to promote
South-South cooperation and exchange.

In the aftermath of discussions between the Heads of State and/or Government of the IBSA
countries at the G-8 meeting that took place in Evian in 2003, and following ongoing trilateral
consultations, the Foreign Ministers of the respective countries met in Brasilia on June 6, 2003.
At this meeting between Ministers Nkosazana Dlamini Zuma from South Africa, Celso Amorim
from Brazil and Yashwant Sinha from India, the launching of the IBSA Dialogue Forum was
formalized through the adoption of the "Brasilia Declaration" .

The main objectives of the IBSA Dialogue Forum could be summarized as follows:

• To promote South-South dialogue, cooperation and common positions on issues of

international importance
• To promote trade and investment opportunities between the three regions of which they
are part
• To promote international poverty alleviation and social development
• To promote the trilateral exchange of information, international best practices,
technologies and skills, as well as to compliment each others competitive strengths into
collective synergies
 • To promote cooperation in a broad range of areas, namely agriculture, climate change,
culture, defence, education, energy, health, information society, science and technology,
social development, trade and investment, tourism and transport.

The IBSA Dialogue Forum has regular consultations at Senior Official (Focal Point), Ministerial
(Trilateral Joint Commission) and Heads of State and/or Government (Summit) levels, but also
facilitates interaction amongst academics, business and other members of civil society