Question

In: Economics

Has the UN successfully fulfilled its mandate in the realm of Global governance.

the role of IMF and World Bank during international crises.

Has the UN successfully fulfilled its mandate in the realm of Global governance.

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Expert Solution

Abstract

The IMF is playing an expanding role in the global monetary system. The IMF’s key roles are the following:

  • To promote international monetary cooperation
  • To facilitate the expansion and balanced growth of international trade
  • To promote exchange stability
  • To assist in the establishment of a multilateral system of payments
  • To give confidence to members by making the IMF’s general resources temporarily available to them under adequate safeguards

A) IMF's role in International Financial Crises

1) The IMF plays its role in stabilizing the international financial system through crisis prevention and crisis mitigation

2)  IMF surveillance, technical assistance, and information provision, contribute to the prevention of crises.

3) IMF lending in support of a country’s adjustment program contributes to the mitigation of crises.

4) IMF has placed increased emphasis on timely surveillance of market developments - along with it IMF's had given warning of the likelihood of a crisis and the measures they could take to avert it.

For Example, Thai authorities were warned of the crises and preventive measures they could take, But the effectiveness of Fund surveillance is limited by the fact that a country may be warned but not take action, either because it disbelieves the warning, or because it is too weak to act short of a crisis.

5) IMF identified the countries’ financial sector vulnerabilities and provided a good basis for crisis intervention.

B) World Bank 's role in International Financial Crises

1) World Bank changed in lending spreads and terms shortly before the crisis, which may have been appropriate in the market conditions prevailing in 2007

2) World Bank extended substantial crisis assistance to the financial sector through financial intermediaries, with the intent to directly address the credit needs of the most vulnerable market agents during a crisis.

3) World Bank taken initiative and implemented the strategy of  Risk Management and Non-Performing Loan Advisory Services are inherently long-term initiatives.

4) World bank supported to mitigate various type of credit risk - loans and others assets turn bad and ceasing to perform,  liquidity risk - withdrawals exceed the available funds and interest rate risk - Rising interest rates reduce the value of bonds held by the bank.

C) Has the UN successfully fulfilled its mandate in the realm of Global governance

The primary role of the United Nations in global economic governance is as a political forum for dialogue concerning the major issues on the global economic agenda and as an integrator of the different perspectives on the economic, social and environmental pillars of sustainable development.

But still UN is not completly successful to address these three main issues and United Nations is unable to provide consistency and guidance at the highest political levels in ways that would benefit the sustainable development on a global scale.


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