Andrew Bailey told the BBC he was “following extremely closely” whether the Trump administration will change its support for the International Monetary Fund (IMF) and the World Bank.

Sources in Washington said the two institutions were caught by a White House executive order for a review of United Nations (UN) and other international organisations.

Mr Bailey said it is “very important that we don’t have a fragmentation of the world economy”.

He said “a big part of that is that we have support and engagement in the multilateral institutions, institutions like the IMF, the World Bank, that support the operation of the world economy. That’s really important.”

There is growing concern in finance ministries and central banks around the world about US disengagement from the institutions, with radical changes to the global financial system now being floated in Washington DC.

The “Project 2025” suggested blueprint for Trump’s presidency, which was authored by figures who are now key White House staff, recommended withdrawal from both institutions and termination of financial contributions.

It said the institutions “espouse economic theories and policies that are inimical to American principles of free market and limited government principles.”

Following a White House executive order, all international intergovernmental organisations of which the US is a member will be reviewed to determine if they are “contrary to the interests of the US” and “can be reformed”.

The six month review may then provide recommendations for withdrawal to President Trump.

Sources in the G20, or Group of Twenty – a club of countries that meets to discuss global economic and political issues – said that during his first term, Trump’s team suggested abolishing the IMF at the 2018 Buenos Aires Summit.

The IMF and World Bank are specialised agencies of the UN.

The US is the largest shareholder in both the Fund and the Bank, institutions which were created by the post-war Bretton Woods Conference 80 years ago.

The IMF provides last resort lending for nations in financial trouble, and surveys economic problems.

The World Bank gives money and cheap loans to developing countries for poverty alleviation and development.

The Trump administration is yet to appoint staff to this area, but USAID’s development spending is currently the focus of Elon Musk’s Department of Government Efficiency cuts.

Some members of the administration are believed to be particularly focused on the World Bank’s loans to China.

Asked about the possibility of the US leaving the Fund, the IMF said yesterday it had a “long history” of “working with successive US administrations”.

The IMF says a threatened wave of tariffs could make trade tensions worse, lower investment, hit market pricing, distort trade flows and disrupt supply chains.

Although tariffs, tax cuts and deregulation could boost the US economy in the short term, it could set the scene for an inflationary boom followed by a bust, it said.

This could weaken US Treasury bonds as a safe bet, it added.

The imminent arrival of Donald Trump in the White House dominates the section on risks in the IMF’s twice yearly forecast for the world economy.

When he was last in power, Trump launched into a trade war with China, and US policy led to tit-for-tat tariffs with the EU.

This time around, Trump has threatened tariffs on countries including China, Mexico and Canada, and has said he would impose 100% tariffs on the BRICS bloc of nine nations if they were to create a rival currency to the US dollar.

While the IMF estimates these measures, along with tax cuts and deregulation, could boost the US economy in the short-term, there are some unusually grave warnings about it could hit the rest of the world and ultimately the US.

It warns that an inflationary US boom could be followed by a possible bust that would potentially “weaken the role of US Treasuries as the global safe asset”.

Investors see US Treasury securities as one of the safest possible bets, because the bonds – which are kind of like an IOU – are backed by the US government.

In addition, if red tape on business is cut too much, this could lead to a runaway dollar that could suck money out of emerging economies, depressing global growth.

Trump going ahead with deportations of illegal immigrants could “permanently reduce potential output” and also raise inflation.

The IMF predicted global growth of 3.3% in both 2025 and 2026, below a historical average of 3.7%.

Its 2025 forecast was largely unchanged from a previous one, mainly because it expects higher US growth than previously predicted to offset lower growth in other major economies.

On Thursday, the World Bank also warned that US tariffs could hit trade and depress global growth this year.

The bank predicts global growth of 2.7% in 2025, which would be the weakest performance since 2019, aside from the sharp contraction seen at the height of the Covid pandemic.

In the UK, the IMF predicted economic output would grow by 1.6% in 2025, edging up from the 1.5% it predicted in October last year.

Chancellor Rachel Reeves said the UK was “forecast to be the fastest growing major European economy over the next two years and the only G7 economy, apart from the US, to have its growth forecast upgraded for this year”.