{
  "title": "Greening the Bretton Woods Institutions by Axel Weber",
  "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2024/06/point-of-view-greening-the-bretton-woods-institutions-axel-weber",
  "canonical": "https://www.imf.org/en/publications/fandd/issues/2024/06/point-of-view-greening-the-bretton-woods-institutions-axel-weber",
  "overlayPath": "/en/publications/fandd/issues/2024/06/point-of-view-greening-the-bretton-woods-institutions-axel-weber/index.md",
  "summary": "Better governance and clearer roles and responsibilities can strengthen IMF–World Bank cooperation on climate",
  "sections": [
    {
      "heading": "Overview",
      "content": "- The Bretton Woods institutions—the IMF and the World Bank—have contributed to global stability, unprecedented economic growth, increasing prosperity, and broad-based poverty reduction.\n- Climate change constitutes a new global challenge requiring a timely, global response; creating new multilateral institutions would take too long, so equipping existing institutions is preferred.\n- Any additional climate mandate for the Bretton Woods institutions must not come at the expense of their core mandates: economic and financial stability for the IMF and sustainable development and poverty reduction for the World Bank.\n- Recommendations draw on the Bretton Woods Committee’s Multilateral Reform Working Group publication “Strengthening the World Bank and the IMF to Meet 21st Century Global Challenges,” cochaired by the author."
    },
    {
      "heading": "Financing",
      "content": "- Climate action at the IMF and the World Bank needs substantial additional financial resources, not simply redirection of existing resources or depletion of financial buffers.\n- The IMF’s Resilience and Sustainability Facility (RSF) illustrates the financing challenge:\n  - Repurposing billions of dollars of “unused” special drawing rights (SDRs) for climate action creates an undesirable trade-off between climate action and the IMF’s core mission.\n  - Dedicating central bank reserves or SDRs to climate action is problematic.\n- Proposed financing approach:\n  - Fund the RSF with new financial commitments from a coalition of countries willing to sponsor such climate action (ideally all IMF member countries would participate along their respective quota allocations).\n  - Treat climate-related IMF activities in all member countries as financial obligations of the general government, which would formally increase the country’s government debt.\n  - Clarify that IMF climate-related action is not a central bank responsibility and should be accounted for as a new IMF task financed by general government expenditures."
    },
    {
      "heading": "Governance",
      "content": "- A clear division of labor between the IMF and the World Bank for their additional climate mandates is essential.\n- Funding obligations and decision-making powers at the IMF and the World Bank need close alignment.\n- Executive management should execute climate policies, but shareholders must have decision-making powers to oversee and control management’s action on climate.\n- World Bank governance proposal:\n  - For the World Bank’s climate agenda, an extended development and climate committee should be the true decision-making body, with powers similar to those of a general shareholder assembly.\n  - This oversight body should be composed of member countries' finance ministers and should approve general guidelines on climate action, funding, and collaboration.\n- IMF governance proposal:\n  - Create a new governing body, the “IMF Council,” charged with oversight and direction of the climate action of the board of governors and the executive board.\n  - The IMF Council should comprise one governor from each member country, typically the country’s finance minister.\n  - The IMF Council should meet at least once annually to steer the climate action of the IMF.\n- Existing advisory bodies referenced:\n  - The World Bank Development Committee advises and makes recommendations to the governing boards of the World Bank Group and the IMF on critical development issues; it is usually composed of member countries’ finance or development ministers.\n  - The International Monetary and Financial Committee is the IMF’s key advisory body on its core financial stability mandate and is composed of finance ministers and central bank governors."
    },
    {
      "heading": "Mandates",
      "content": "- The IMF and the World Bank should leverage their historical strengths and 80-year global experience.\n- Historical institutional strengths:\n  - IMF: top-down macroeconomic policy advice and macro-financial stability assessments.\n  - World Bank: bottom-up project support, development policy advice, and infrastructure investment guidance.\n  - Financial assistance: IMF—concessional lending and debt relief; World Bank—development grants and project funding.\n- Recommended division of climate-related responsibilities:\n  - IMF: focus on macroeconomic policy advice on integration of climate considerations into fiscal, monetary, and exchange rate policies, plus macro-financial stability assessments.\n  - World Bank: offer policy advice on climate-related development policies and infrastructure investments.\n  - IMF climate-related financial assistance: provide concessional lending to help countries address immediate balance of payments and fiscal challenges exacerbated by climate-related shocks.\n  - World Bank climate-related financial assistance: mobilize climate financing through concessional and nonconcessional lending, grants, and innovative financial instruments to support climate-related projects and programs, particularly in low-income and vulnerable countries."
    },
    {
      "heading": "Recent IMF and World Bank Actions on Climate",
      "content": "- World Bank:\n  - Increased financing for climate-related projects with focus on renewable energy, energy efficiency, sustainable transportation, climate-resilient infrastructure, and natural resource management.\n  - Issues green bonds to finance climate-friendly projects and programs.\n  - Provides technical assistance, policy advice, and policy-based lending to help countries design and implement carbon pricing mechanisms, such as carbon taxes and emissions trading systems.\n- IMF:\n  - Conducts assessments of climate-related risks to macroeconomic stability, financial systems, and economic growth, providing analysis and policy recommendations.\n  - Offers policy advice on integrating climate considerations into fiscal, monetary, and structural reform agendas.\n  - Includes climate-related risks in financial sector surveillance and supports development of green finance markets and instruments, including green bonds, climate insurance, and carbon pricing mechanisms."
    },
    {
      "heading": "Key Policy Recommendations (summary)",
      "content": "- Mobilize substantial new financial resources for climate action at the IMF and World Bank rather than repurposing existing SDRs or central bank reserves.\n- Fund the RSF through new commitments from a coalition of countries aligned with quota allocations.\n- Account for IMF climate-related activities as general government obligations.\n- Establish clear governance structures:\n  - An extended development and climate committee at the World Bank with decision-making authority composed of finance ministers.\n  - An “IMF Council” composed of one governor per member country to meet at least once annually to oversee IMF climate action.\n- Preserve the IMF’s and World Bank’s core mandates while aligning their comparative advantages to climate-related policy advice and financing.\n\nAxel A. Weber, F&D Magazine, June 2024. Opinions expressed are those of the author and do not necessarily reflect IMF policy.\n\n---\n\n\nSource: https://www.imf.org/en/publications/fandd/issues/2024/06/point-of-view-greening-the-bretton-woods-institutions-axel-weber"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/fandd/issues/2024/06/point-of-view-greening-the-bretton-woods-institutions-axel-weber/index.md)",
    "[Structured JSON version](/en/publications/fandd/issues/2024/06/point-of-view-greening-the-bretton-woods-institutions-axel-weber/index.json)",
    "[Bundle manifest](/en/publications/fandd/issues/2024/06/point-of-view-greening-the-bretton-woods-institutions-axel-weber/bundle-manifest.json)",
    "Authors: AXEL WEBER",
    "Published: June 3, 2024",
    "The Bretton Woods institutions—the IMF and the World Bank—have contributed to global stability, unprecedented economic growth, increasing prosperity, and broad-based poverty reduction.",
    "Climate change constitutes a new global challenge requiring a timely, global response; creating new multilateral institutions would take too long, so equipping existing institutions is preferred.",
    "Any additional climate mandate for the Bretton Woods institutions must not come at the expense of their core mandates: economic and financial stability for the IMF and sustainable development and poverty reduction for the World Bank.",
    "Recommendations draw on the Bretton Woods Committee’s Multilateral Reform Working Group publication “Strengthening the World Bank and the IMF to Meet 21st Century Global Challenges,” cochaired by the author.",
    "Climate action at the IMF and the World Bank needs substantial additional financial resources, not simply redirection of existing resources or depletion of financial buffers.",
    "The IMF’s Resilience and Sustainability Facility (RSF) illustrates the financing challenge:",
    "Proposed financing approach:",
    "A clear division of labor between the IMF and the World Bank for their additional climate mandates is essential.",
    "Funding obligations and decision-making powers at the IMF and the World Bank need close alignment.",
    "Executive management should execute climate policies, but shareholders must have decision-making powers to oversee and control management’s action on climate.",
    "World Bank governance proposal:",
    "IMF governance proposal:",
    "Existing advisory bodies referenced:",
    "The IMF and the World Bank should leverage their historical strengths and 80-year global experience.",
    "Historical institutional strengths:",
    "Recommended division of climate-related responsibilities:",
    "World Bank:",
    "IMF:",
    "Mobilize substantial new financial resources for climate action at the IMF and World Bank rather than repurposing existing SDRs or central bank reserves.",
    "Fund the RSF through new commitments from a coalition of countries aligned with quota allocations.",
    "Account for IMF climate-related activities as general government obligations.",
    "Establish clear governance structures:",
    "Preserve the IMF’s and World Bank’s core mandates while aligning their comparative advantages to climate-related policy advice and financing."
  ],
  "alternates": {
    "markdown": "/en/publications/fandd/issues/2024/06/point-of-view-greening-the-bretton-woods-institutions-axel-weber/index.md",
    "json": "/en/publications/fandd/issues/2024/06/point-of-view-greening-the-bretton-woods-institutions-axel-weber/index.json",
    "bundleManifest": "/en/publications/fandd/issues/2024/06/point-of-view-greening-the-bretton-woods-institutions-axel-weber/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-15T19:18:44.280Z"
}