Remarks by World Bank Group President David
Malpass on Bretton Woods 75th Anniversary
July 16, 2019
World Bank Group President David Malpass
Paris, France
As Prepared for Delivery


We’re here today to commemorate the 75th anniversary of the 1944 conference in
Bretton Woods, New Hampshire. As you all know, the conference led to the creation of
the International Bank for Reconstruction and Development, now the World Bank, of
which I’m president.
I’d like to mention some key points in the World Bank’s financial history and discuss
some of the development challenges. Many more details are in my essay in the Bretton
Woods 75 compendium.
When the Bretton Woods conference opened on the evening of July 1, 1944, battles
raged across Europe and the Pacific. U.S. Treasury Secretary Henry Morgenthau, the
chair of the conference, urged the delegates from 44 countries to create “a dynamic
world economy, in which the people of every nation will be able to realize their
potentialities in peace… to raise their own standards of living and enjoy, increasingly,
the fruits of material progress.�
The World Bank started operations in 1947, collecting capital subscriptions from
shareholding countries and approving its first loan. That loan was a straightforward
operation based on a short letter of application from France outlining France’s
reconstruction program. The World Bank issued its first bond in July 1947, and made a
$250 million loan to France for equipment and raw material purchases. That’s, in
today’s dollars, $2.85 billion, still one of the largest loans in the Bank’s history.
Reconstruction remained one of the Bank’s key activities. I was in Osaka, Japan for the
G20 meetings in June and rode the bullet train to Tokyo. The World Bank helped
finance it in the early 1960s in time for the 1964 Tokyo Olympics. Soon afterward,
Japan was able to graduate from World Bank financing and quickly became a major
donor of the World Bank. We welcome that economic success and our partnership with
Japan and other donors through the decades.
Another early activity of the Bank was development. The first paragraph of the Articles
of Agreement states that one of the purposes of the Bank is “the encouragement of the
development of productive facilities and resources in less-developed countries.� The
Bank approved two sovereign loans to Chile in 1948 for equipment and agricultural
machinery.
Still in the 1940s, the Bank recognized in its third annual report that part of its value was
in analysis, “to help its members to analyze their development problems… mapping out
the broad lines along which their development may be advanced most soundly and
rapidly.�
Many of these lines of development need to come from the private sector. In 1956, the
International Finance Corporation (IFC) opened for business with the difficult mission of
investing only in private sector projects “where sufficient private sector capital is not
available on reasonable terms.�
In 1960, the Bank’s shareholders created IDA, the International Development
Association, to make grants and low-interest rate loans to the poorest countries. Since
then, IDA has provided nearly $400 billion in 113 countries, with donors replenishing its
fund every three years. There’s been some success in terms of poverty
reduction. Helped by the World Bank Group’s development assistance and funding, the
number of people living in extreme poverty has declined by more than 1.1 billion. The
poverty rate in 2018 was estimated at 8.6 percent. That’s thought to be the lowest
global average rate in history, though it’s still much too high.
In a world that has gone through a great deal of turbulence since World War II, IDA’s
three-year cycle of replenishing funds for the poorest countries has shown unusual
stability and a clear sense of purpose. By the end of 2019 we hope to conclude
discussions on IDA19, the 19th replenishment, with France, our host today, playing a
strong leadership role in the replenishment process and in encouraging the
development community’s focus on the Sahel.
The needs facing IDA and the world are great. More than 700 million people still live in
extreme poverty. In sub-Saharan Africa, the numbers are growing, not declining, and
15 million new jobs would be needed every year to keep up with population growth
there. Current economic growth rates will not be sufficient to achieve the ambitious
goals that we all have for sustainable development.
Just as the World Bank and development policy evolved during the 75 years since the
Bretton Woods conference, so too did development finance. The Bank pioneered the
currency swap in 1981, swapping U.S. dollars for Swiss Francs and Deutschmarks with
IBM. The original World Bank sovereign loan documents became much longer, with
clauses regarding negative pledges and pari passus. Oil exporters borrowed heavily in
the 1970s using commercial bank loans that were syndicated to hundreds of
participants, creating very difficult debt restructurings in the 1980s. I worked for
Treasury Secretary James Baker on the 1980s debt problems and then on the bond
securitization process for Secretary Brady when I was the head of the Developing
Nations and MDB part of Treasury in the Reagan Administration.
With Secretary Brady, I attended the World Bank and IMF annual meetings in Berlin in
the fall of 1988 and noted the vital importance of the World Bank and other International
Financial Institutions in the development of Eastern Europe after the fall of the Berlin
Wall and the Soviet Union.
In 1989, the World Bank issued the first globally traded and settled bond. It eliminated
pricing disparities between the United States and Europe, reducing the Bank’s
borrowing costs. The World Bank created its first electronic bond in 2000. It was the
first bond offered globally on the Internet, allowing retail investors to invest in the Bank’s
development activities for the first time. Eight years later, the Bank issued the world’s
first Green Bond. For the first time, investors could directly support climate projects
without incurring the project risk, helping change the way investors decide how to
allocate their investments for a balance of risk, reward, and developmental impact.
In 2018, the Bank and shareholders developed a capital increase package for both the
IBRD and IFC. The IBRD portion encourages graduation and a differential pricing
structure that will help shift resources toward borrowers that need it most. It develops a
sustainable lending limit that can help the Bank’s effectiveness. The IFC capital
increase builds on the experience that a country’s private sector environment and its
development plan, core early ideas in the Articles of Agreement of the World Bank, are
critical to meeting the World Bank’s mission of ending poverty and shared prospe rity.
Thus, the World Bank Group of 2019 has vastly more tools and approaches than in its
early days. I’ve mentioned IBRD, IDA and IFC. There’s also ICSID, the International
Centre for Settlement of Investment Disputes, founded in 1966 and MIGA, the
Multilateral Investment Guarantee Agency, founded in 1988 when I was at the U.S.
Treasury Department the first time.
The World Bank Group also uses a variety of analytical tools and provides technical and
advisory services that have helped countries make progress. One example is the
annual Doing Business report, which rates countries on their business environment
including contract law, start-up regulation, and taxation. Another example is the Bank’s
Women, Business and the Law report, a comprehensive global analysis of laws and
regulations that affect women’s ability to fully participate in the economy. We are now
using the Human Capital Index, which was launched last year, to help quantify the
importance of full health, successful learning, and job skills.
I’d like to turn now to a short look ahead. The focus of our work at the World Bank
Group is based on strong country programs to improve living conditions — to drive
growth, raise median incomes, create jobs, fully incorporate women and young people
into economies, address environmental and climate challenges, and support a stronger,
more stable economy for everyone.
Today, the pace of innovation is accelerating, and millions continue to escape
poverty. But many parts of the world are more fragile than in recent decades, with more
of the world’s poor living in areas suffering from conflict, violence, and the effects of
climate change. Strong leadership is needed to focus on liberty, safety, and creating an
environment that fosters better opportunities — we urgently need countries to break
through their obstacles in order to allow the lives of the poorest and most vulnerable to
improve.
Secretary Morgenthau closed the consequential Bretton Woods conference in the
mountains of New Hampshire on July 22, 1944, 75 years ago. The participants had
actively debated, shaped, and agreed on a set of ideas and ideals that built a strong
foundation for the World Bank Group and our many ongoing developmental needs.