Will Trump Finally Kill the Bretton Woods System?

Banga’s about-face to appease Trump isn’t surprising, say those familiar with the World Bank. “They’ve tried to present themselves as this archetype of multilateralism, but these institutions remain completely hide-bound to Washington,” says SOAS economist Richard Kozul-Wright, a senior fellow with the Global Economic Governance Initiative at the Boston University Global Development Policy Center, who previously served as the director of the Globalisation and Development Strategies Division in the UN Conference on Trade and Development. Whether or not the U.S. decides to leave the IMF and World Bank, Kozul-Wright hopes that uncertainty over that question—and the United States’ role in the global economy more generally—can prompt world leaders to consider alternatives to the U.S.-centric Bretton Woods framework.

A recent report co-authored by Kozul-Wright, Chiara Mariotti, Rishikesh Ram Bhandary and Kevin P. Gallagher examines the growing role of development finance institutions like the Asian Development Bank and Interamerican Development Bank, which collectively control upwards of $23 trillion worth of combined assets.

While these multilateral development banks to-date have often focused on partnerships with and appeals to the private sector, the report looks at promising examples of them instead partnering with national development banks. That kind of coordination, the authors argue, “can play a critical role in mobilizing additional capital and linking political ambition with policy action. Working as an ecosystem, they can shift investment horizons away from debt-dependent, short-term (often speculative) financial instruments, towards the productive investments and public goods needed to meet development and climate goals.”