The most essential element was that the IMF had provided some criteria for special access decisions. The most substantive was that there should be “a high probability that the member’s public debt is sustainable in the medium term”. But the situation in case of Greece was different because the IMF staff found that the debt of Greece was not compatible with a high probability of dept sustainability. The reality was that the financial assistance from the IMF was necessary. If the IMF’s Executive Board did not provide the assistance, it was possible that the global economy would destabilize and adverse effects would be appeared for the Euro.
“The IMF is a secretive institution with no accountability. The IMF is funded with taxpayer money, yet it operates behind a veil of secrecy. Members of affected communities do not participate in designing loan packages. The IMF works with a select group of central bankers and finance ministers to make polices without input from other government agencies such as health, education and environment departments. The institution has resisted calls for public scrutiny and independent evaluation”.
From America’s involvement in the 2003 invasion of Iraq to the government’s lowering of interest rates. Stiglitz also discusses about the scale of the disaster in 2008 and critiques the solutions that the American governments under Bush and Obama have carried out in order to respond to the problem. Moreover, Freefall highlights the malpractices caused by the banks in lending mortgages and loan policies which have jeopardised clients and consumers. Stiglitz’s book mentions the aftermath of the crisis and the continued fragility of the international markets from the unaddressed flaws of the financial sector. With that being said, Freefall highlights Joseph Stiglitz's perspective on what should have been done by both the government and the banking firms in order to prevent a reoccurrence of another Wall Street collapse.
The main cause of the crisis was that capitalism was no longer a self-regulating system. Another issue was the overproduction of goods that followed a period of prosperity and the growth of the national economy. The presence of large capital acted outside the framework of national regulation and the spontaneous development of the market led to the production of goods, including items that the market could not digest. The population’s purchasing power did not match the number of goods that were produced and presented on the market. As a result, the market collapsed.
International Financial Institutions (IFIs) - IMF and WORLD BANK: Do they serve the purpose they were instituted for? Vishal Suraj Pinto University of the People Introduction: International Monetary Fund (IMF) and World Bank are together referred to as International Financial Institutions (IFIs). The sole purpose of these institutions to be structured and formed was to assist a member nation in strengthening their failing economy. Virtually, every existing country on earth is a member of these institutions and the governments of the member nations own and direct the institutions, at least on paper. Is there a difference between the two organizations – IMF and World Bank?
Global Financial Crisis 2008 was voidable as it was not a natural, inevitable catastrophe. I clearly believe that the crisis was a result of human mistakes, misjudgments, and misdeeds that resulted in systemic failures for which our nation has paid dearly. The current depressed state of consumer and business sentiment can be attributed to specific failures on the part of policymakers, regulators and bankers. Firstly, governments and central banks failed to constrain an expansion of credit that drove an unsustainable boom in asset prices. The United States banks created too much of money with the intention to push up the house prices and speculate the financial markets.
Considering the goals and the criticisms of the IMF and the World Bank, I strongly believe that they unfairly threaten the sovereignty of certain nations due to the following points: i. The way the World Bank and the IMF are governed limits their fairness in giving out assistance to countries especially poorer countries in Africa who needs assistance most. According to Woods (2007), while the World Bank represents 188 countries, it is run by a small number of economically powerful countries. These countries (which also provide most of the institution 's funding) choose the leadership and senior management of the World Bank, and so their interests dominate the bank. They impose their interests as conditions for granting assistance and some of these conditions threaten the sovereignty of Nations who accept them.
Stiglitz( 2002) mainly focus on the three main economic institutions, International Monetary Fund(IMF), World Bank and World Trade Organisation (WTO), which make great influences towards globalisation. Although Stiglitz(2002) admitted that globalisation brings us advantages, he believed that globalisation bring us more
It caused major losses in the financial sector globally. Firstly, the loss in aggregate market capitalization of global equity exchanges is one way to judge the global impact of the crisis. After some fluctuation the erosion of equity value stood between ten and twelve trillion dollars from 2007 to 2010 (Adelson, 2013). Secondly, the financial crisis roughly caused a 5.25% drop in global gross domestic product in 2009. To put this into perspective, the biggest percentage drop ever recorded before the crisis was 0.96% in 1982 (Adelson, 2013).
The Global Financial Crisis has shown many weaknesses in the European financial system and as we have seen, there have been many regulatory changes and still will be in order to avoid a future crisis. For this purpose, the existing institutions before the crisis burst have carried out some actions such as the development of the Basel III Accord, among others, with the aim of strengthening the regulation and supervision of the banking sector. And throughout the crisis, new institutions have been created or have substituted others having among its objectives the prevention of a future crisis and a unification of the banking sector. European Central Bank The European Central Bank (ECB) has played a key role in the management of the financial