Abstract
Understanding the governance of Bretton Woods Financial Institutions (BWFI) may help illuminate their role in funding global development and fighting poverty, and may allow the assessment of their effectiveness in fulfilling their mandate. The number of votes to which each member country is entitled in the decision making of the BWFIs is crucial to the institutions’ current operations, and to their future. The governance of BWFIs is constantly subject to harsh critics, specifically and most seriously the so-called 15% rule, where only 15% of votes are required to be owned by any member to block any decisions at institutions Board meetings. Not any country member is, however, permitted to own such a number of shares, and many country members have tried unsuccessfully. Consequently, decision-making at BWFIs is structurally monopolized by a club of a handful members. This situation has made reform of the governance of institutions, a constant demand, aim to give more voice to poor and emerging economies, which are constantly underrepresented, despite their growing weight within the global economy.
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Notes
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The Executive Board consisting of 24 elected Executive Directors is maintained and the number of directors is supposed to be reviewed every 8 years (IMF Financial Information 2016a).
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The current quota formula is a weighted average of GDP (50%), openness (30%), economic variability (15%), and international reserves (5%).The formula also includes a “compression factor” that reduces the dispersion in calculated quota shares across members (IMF_FY_2016 financial operations, p. 41).
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The current president of WBG is Korean-American and the former president of Dartmouth College.
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Naciri, A. (2018). Governance of Bretton Woods Financial Institutions. In: The Governance Structures of the Bretton Woods Financial Institutions. SpringerBriefs in Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-97906-9_4
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