July 1, 2019 saw the 75th anniversary of the founding of the World Bank and the International Monetary Fund (IMF).
In the closing year of World War Two, the Allies met at the Mount Washington Hotel in Bretton Woods, N.H., to ensure that there would be openness and transparency in international financial dealings going forward.
But three-quarters of a century is a long time to keep the same institutions following the same policies, writes California Western’s Professor James Cooper in an op-ed recently published in The Hill.
Operating under these same policies today is fraught with problems. The changing nature of globalization—with its free flow of capital, reduced barriers to trade, and harmonization of customs and banking procedures—have made a few very wealthy, stunted equity growth, and saddled developing economies with unsustainable debt.
Added to that is the onset of new financial instruments such as distributed ledgers, cryptocurrencies, and blockchain technology—all challenges to sovereignty, writes Professor Cooper.
Likewise, the China Development Bank and others have provided new challenges for the dominance of the Bretton Woods institutions in providing stability for the international economy.
It is time to reset international banking relationships and provide rules for financial technology (FINTECH) such as cryptocurrencies. Today, with economic nationalism again rearing its ugly head, and the ongoing challenges to national economies such as cryptocurrency and criminal organizations influencing governments, the IMF and World Bank should work on updating their respective missions and policies.
Read Professor Cooper’s complete op-ed in The Hill here.