Crucial Role for IMF and World Bank in Trade Conflicts and Climate Crisis

A former IMF Director and Nyenrode Business University professor calls for a new Bretton Woods to prevent economic fragmentation.

Call for Bretton Woods 2.0

Economic and political tensions are escalating, the global economy is fragmenting, and climate change is having an increasingly significant economic impact. The world stands at a crossroads where the International Monetary Fund (IMF) and the World Bank can—and must—play a crucial role in safeguarding a financially stable global economy.

This is the central argument of Prof. Dr. Paul Hilbers, former Dutch Executive Director at the IMF and Professor at Nyenrode Business University, in his emeritus lecture on February 14.

Economic Stability

International relations are shifting, with far-reaching consequences. “Firstly, we are witnessing increasing fragmentation of the global economy, where countries prioritize their own interests over international cooperation. This can lead to trade restrictions, political tensions, and a weakening of the global economy as a whole. Secondly, we face the growing economic consequences of climate change, including failed harvests, rising sea levels, and wildfires, which cause significant economic damage,” says Hilbers.

He compares the current situation to that of 1944 when the Bretton Woods Agreement was established. This agreement created a new international monetary system, leading to the formation of the IMF and the World Bank. “It’s crucial to remember that the opening of the global economy has raised living standards worldwide, reduced extreme poverty, and increased prosperity and stability. We need a new Bretton Woods moment to avoid taking the wrong path too easily.”

Crucial Role for IMF and World Bank

Hilbers envisions a pivotal role for the IMF and World Bank. “The two institutions have a global membership, a broad economic and financial mandate, and a strong reputation. Effectively executing this mandate in the current uncertain circumstances is of great importance. In addition to the tools they already have for stabilizing the macroeconomy, the IMF and World Bank can also play a significant role in addressing climate change and mitigating its economic impacts. This includes advising countries on sustainable economic policies and assisting in the transition to a green economy. They can also support climate adaptation by financing climate-resilient infrastructure and offering guidance on climate investments.”

International Cooperation

Hilbers calls on policymakers, central bankers, and academics to join forces internationally. He believes the IMF and World Bank can exert the necessary influence and raise awareness about the dangers of global fragmentation. “These organizations have demonstrated over the past eighty years that they can adapt to changing circumstances and effectively respond to crises. We should have confidence in their continued leadership.”

About Bretton Woods:

The Bretton Woods Agreement aimed to restructure the global economy, prevent trade and currency wars, and promote economic development. This system remained in place until 1971, when floating exchange rates emerged. However, the IMF and World Bank have continued to play crucial roles in fostering international trade and financial flows, contributing to a more integrated global economy and increased prosperity.

About Paul Hilbers:

Prof. Dr. Paul Hilbers is an Emeritus Professor at Nyenrode Business University, specializing in financial sector supervision. He has also worked at De Nederlandsche Bank and recently served as the Dutch Executive Director at the IMF, giving him first-hand experience with shifting international relations and their economic and financial implications.

About Nyenrode Business University:

Nyenrode Business University is dedicated to building a sustainable future by empowering students and participants to become responsible leaders. Nyenrode achieves this through a unique combination of academic theory, practical relevance, and personal development. Founded in 1946 by and for the business community with an international outlook, Nyenrode is a private university offering intensive academic programs and short and long-term courses in business, management, accountancy, controlling, and tax law. The university also conducts research in these fields.

For more information, visit www.nyenrode.nl. To talk to Prof. Dr. Paul Hilbers, please contact Chloë Lane at BlueSky Education at chloe@bluesky-pr.com.