Q.Why did the world feel the need to set up permanent international economic institutions after the Second World War?

The pre-war experience of currency instability and trade breakdown showed that no single country could fix these problems by acting alone.

Before the war, countries had responded to economic distress with competitive currency devaluations and unilateral tariff increases — each trying to protect its own economy, but collectively deepening the world depression and disrupting trade for everyone. The Second World War then left economies physically destroyed and in need of massive reconstruction finance that private markets alone were unwilling to supply at that scale.

Delegates at the Bretton Woods Conference (1944) recognised that these were shared, cross-border problems requiring shared, cross-border solutions: a body to stabilise exchange rates and lend for short-term balance-of-payments needs (leading to the IMF), a body to finance long-term reconstruction and development (leading to the World Bank), and — later — a rules-based system to prevent the tariff wars of the 1930s from recurring (eventually the GATT/WTO). Regional bodies such as SAARC followed later still, addressing cooperation needs specific to neighbouring economies.

Treating the IMF and World Bank as if they were created for identical purposes — they were designed as a deliberate pair, one for short-term monetary stability, the other for long-term development finance.