We tend to think that the large banks in today’s business world are the ones that have the global financial power. They have influence that span across many nations. However, they’re not as powerful to control world economics. The true captains of economic policies and world economies are the central and global banks such as the World Bank and the International Monetary Fund (IMF).
The Washington Consensus developed laws that granted these organizations the global influence they have today to control world economics. The consensus includes ten economic policy recommendations aimed at guiding economic development for developing countries. These institutions therefore interfere in affairs of developing nations and economic policies. Recently, China also attempted to redirect global trade domination with its own Beijing Consensus Initiative – One Belt, One Road.
Initially, central banks main task was issuing currency with no connections to governments. But since the 18th and 19th centuries, their roles have evolved after switching from currency exchanges to banknotes printing which granted them more monetary freedom for themselves and their governments. There have been debates to allow central banks to draft monetary policies away from politics and political pressure, and many are termed independent institutions. Still, their governments actively influence central bank’s policymaking. For instance, South Korea in 2014 had the government put enormous pressure on the Bank of Korea to reduce interest rates for an increase in economic growth. The initiative was indirect by the government, but it changed the monetary policies