Financial (In)Stability: The International Monetary Fund and the World Bank

The concept of financial stability is difficult to define and even more difficult to be understood. The purpose of this paper is to examine whether the International Monetary Fund, (IMF) and World Bank (WB) provide financial stability to countries with financial problems. Until today, a large number of countries have requested help from the IMF and the WB in order to deal with a financial crisis and to avoid the possibility of declaring default. We examine two characteristic examples of the Russian and East Asian financial crises and our findings show that the support by these two international organizations was mostly without success. After a detailed analysis and graphs, we conclude that financial stability is not promoted but also we observe that the planning suggested by these international organisations leads to rising unemployment and poverty associated with a declining GDP growth.