Thursday, February 21, 2013

Where the Money Goes: The World of Global Finance


The WB, the WTO, the GATT, the IMF. Four acronyms that together hold more power than most governments on earth. Together, they have represented the face of international finance and Western/American financial interests for the last 70 years. But what are these organizations? What is global finance, and what does it do? And most importantly, why does it matter to you?

Let’s start with a bit of history. Our story begins with the fall of Berlin and the end of World War II. Eastern Europe was a wreck, after having spent most of their accrued wealth recovering from the first World War only to be obliterated once again. They were in desperate need of loans to assist in the development of infrastructure, and with most of the world either financially crippled, physically destroyed or both, the United States emerged as the only country with an economy capable of supporting the necessary loans. This led to the creation of GATT, or the General Agreement on Tariffs and Trade in 1948, and the International Monetary Fund (IMF) in 1944. 

These institutions had very different purposes at the time; the GATT, negotiated by the UN, was to regulate the trade between countries and protect countries from exploitation, both preventing and punishing. The IMF on the other hand, was a collaboration of 44 countries who each contributed to a central fund which could be used for loans to developing and recovering countries. It also oversaw a countries ability to repay loans and could help to stabilize fluctuating currencies and aid in economic growth, generally through the provision of loans. This led to an enormous amount of debt being held by recovering countries and, later on, developing countries.
So why does this matter to you? Keep reading to understand what’s up with Global Finance!
           
WE

No comments:

Post a Comment