The World Bank Group was created in 1944 during the United Nations Monetary and Financial Conference, better known as the “Bretton Woods Conference” because it was held in Bretton Woods, New Hampshire, in the United States.
The Bretton Woods Conference consisted of delegates from 44 countries who were members of the victorious Allies in World War II. Initially, the International Bank of Reconstruction and Development (IBRD) was created to finance the rebuilding of Western Europe, but this mission was later expanded to encompass development projects across the entire globe, so the organization was renamed “The World Bank.”
The bank officially opened its doors for business in 1946 and a year later the first loan request arrived to the bank’s headquarters in Washington DC. It was a one-page letter, from the French Government, requesting a $500 million loan for post-war reconstruction. According to the WB website:
“The overall requirements included $106 million for equipment, $180 million for coal and petroleum products, and $214 million for raw materials. The equipment included ships, freight cars, trucks, radio, and electrical equipment, and coal mining equipment. The list of raw materials included fertilizers, copper, tin, synthetic rubber, animal fats, and chemicals.”.
In 1968, the World Bank pivoted from reconstruction to sustainable development, which sought to reconcile the needs for economic growth with environmental protection. At the same time, the bank began to focus on the use of capital flows in developing countries to help narrow the income disparity between developed and poorer countries.
In the early 1980s, as many states became unable to service their external debt to multilateral lending institutions, including the World Bank, the organization evolved to a more proactive approach in writing, creating, and shaping economic and social policies in developing countries. Loans were only to be given after borrowing countries agreed to structural adjustment programs (SAPs) designed by the World Bank that required the implementation of economic stabilization strategies, including budget cuts and the privatization of state-run enterprises.
What is the World Bank?
The World Bank (WB) is both the name of an umbrella organization (called the World Bank Group) as an international financing institution that provides grants and loans to some 100 developing countries. Generally speaking, when the term “World Bank” is used, it refers to the financing activities as opposed to the other services and products provided by the World Bank Group.
