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There is an urgent need for the Bretton Woods institutions, particularly the International Monetary Fund (IMF) and the World Bank (WB) to modernise themselves. Can the Asian Infrastructure Investment Bank (AIIB) and New Development Bank (NDB) serve as worthy alternatives to the Bretton Woods institutions?

Topic: Effects of liberalization on the economy.

4. There is an urgent need for the Bretton Woods institutions, particularly the International Monetary Fund (IMF) and the World Bank (WB) to modernise themselves. Can the Asian Infrastructure Investment Bank (AIIB) and New Development Bank (NDB) serve as worthy alternatives to the Bretton Woods institutions?

Difficulty level: Tough

Reference: Live mint ,  Insights on India

Why the question:

A distinguished economist has argued in an Economic Times op-ed that India must strive during its year-long G20 presidency, which started from December 1, to get the Bretton Woods institutions, particularly the International Monetary Fund (IMF) and the World Bank to modernise themselves

Key Demand of the question:

To write about the drawbacks of WB and IMF and suggest possible reforms in it and to write about the potential of AIIB and NDB as alternatives to IMF and WB.

Structure of the answer:

Introduction: 

Begin by giving context.

Body:

First, in brief, write about the major aspects of global economy that WB and IMF deal with.

Next, using facts and figures to substantiate, give the successes and limitations of WB and IMF in regards to – voting rights, dominance by global north, foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world etc.

Next, suggest possible reforms that are needed in the IMF.

Next, write about the potential and limitations of AIIB and NDB to be alternatives for IMF and WB.

Conclusion:

Conclude by writing a way forward.