The Imf (international Monetary Fund) Case

THE IMF (International Monetary Fund)

The International Monetary Fund (IMF) is an organization which involves 188 countries, working to foster global monetary cooperation, secure financial stability, simplify international trade, stimulate high employment and supportable economic growth, and decrease poverty around the world (IMF, 2012).

The Origin of IMF

On July 22, 1944 in the aftermath of the great depression, 44 countries signed the ‘'Bretton Woods Agreements'' founding the International Monetary Fund and its sister society, the International Bank for Reconstruction and Development (The World Bank). The agreements were so-named after the Mount Washington Hotel at Bretton Woods, New Hampshire, where the negotiations over the design of these two international institutions took place.

Since that time The IMF and the World Bank have come to be known as the ‘'Bretton Woods'' institutions.

The main reason why the IMF was formed was to promote high employment and helping the emerging countries to reduce the poverty.

Originally the IMF was planned to monitor and help maintain safe but adjustable exchange rates, primarily between the industrialized countries of Western Europe and USA.

Why was an institution like the IMF deemed necessary?

Because in an earlier era, during the end of nineteenth century, countries had been on a strict ‘'gold standard'' of foreign exchange. The national currencies of different countries were all convertible into gold held on reserve by governments.

Key IMF activities

The IMF supports its membership by providing

• Provision of foreign currencies (via quotas)

• Provision of world liquidity

• Compensatory financing facilities

• Extended fund facilities

• Oil facilities

• Buffer stock facilities

• Supplementary financing facility

• Enlarged access facility

• Structural adjustment facility

• Trust fund facility

• Systematic transformation facility

• Special