the international monetary fund was formed to provide for the short-term flow of money
An important component of the Bretton Woods agreements was the creation of two new international financial institutions, the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD). Collectively referred to as the Bretton Woods institutions, they became operational in 1947 and 1946 respectively. The IMF was established to support the monetary system by facilitating cooperation on international monetary issues, providing advisory and technical assistance to members, and offering emergency lending to nations experiencing repeated difficulties restoring the balance of payments equilibrium. Members would contribute funds to a pool according to their share of gross world product, from which emergency loans could be issued. Member states were authorized and encouraged to employ capital controls as necessary to manage payments imbalances and meet pegging targets, but prohibited from relying on IMF financing to cover particularly short-term capital hemorrhages. While the IMF was instituted to guide members and provide a short-term financing window for recurrent balance of payments deficits, the IBRD was established to serve as a type of financial intermediary for channeling global capital toward long-term investment opportunities and postwar reconstruction projects. The creation of these organizations was a crucial milestone in the evolution of the international financial architecture, and some economists consider it the most significant achievement of multilateral cooperation following World War II. Since the establishment of the International Development Association (IDA) in 1960, the IBRD and IDA are together known as the World Bank. While the IBRD lends to middle-income developing countries, the IDA extends the Bank's lending program by offering concessional loans and grants to the world's poorest nations.
Global financial system