ABSTRACT
The principal criticisms of the International Financial Institutions (IFIs) such as the International Monetary Fund (IMF ) and the World Bank centre on their addiction to neoliberalism and insistence on smaller government and an increased allocative role for markets (Vines and Gilbert, 2004; Meltzer, 2000). It is therefore reasonable to assume that markets have figured prominently in the policies and practices of the IFIs and that the Global Financial Crisis (GFC) has potentially shaken the extent to which market disciplines and practices are embedded in the IFIs. It is a reasonable assumption but a wrong one. One of the principal challenges in reforming the IFIs is to embed, not reembed, important market principles and practices; specifically, to let the market allocate losses among borrowers and lenders when loans go sour. This market discipline has been notably absent from our system of global financial governance since at least 1982. When analyzing the re-embedding of markets it is vital to understand the areas in which the World Bank, and particularly the IMF, have never allowed market principles to govern.
