International Monetary Fund

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The International Monetary Fund (IMF) is the international organization entrusted with overseeing the global financial system by monitoring foreign exchange rates and balance of payments, as well as offering technical and financial assistance when asked.

The IMF keeps account of international balance of payments accounts of member states, and for members in financial distress can acts as a lender of last resort, e.g. currency crisis, problems meeting balance of payment when in deficit and debt default. Membership is based on quotas, or the amount of money a country provides to the fund relative to the size of its role in the international trading system.

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Organization and Purpose

The IMF describes itself as: "an organization of 184 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty". Of all UN member states only North Korea, Cuba, Liechtenstein, Andorra, Monaco, Tuvalu and Nauru are either integrated and represented by other member states or choose not to participate.

History

Agreement for its creation came at the United Nations-sponsored Monetary and Financial Conference in Bretton Woods, New Hampshire on July 22, 1944. The principle architects of the IMF at the Bretton Woods Conference were John Maynard Keynes and the Assistant Secretary of the United States Treasury, Harry Dexter White. The Articles of Agreement came into force on December 27, 1945, the organization came into existence in May 1946, as part of a post-WWII reconstruction plan, and it began financial operations on March 1, 1947.

It is sometimes referred to as "a Bretton Woods institution", along with the Bank for International Settlements (BIS) and the World Bank. Together, these three institutions define the monetary policy shared by almost all countries with market economies.

The IMF was instituted in and operated as a short-term credit fund for exchange rate stabilization throughout the Keynesian Welfare State era of 1945 - 1971. With the removal of the fixed exchange rate system in the early 70s - the original role for the IMF has changed. As neo-liberalism took hold in the US and Western Europe through the 70s and 80s, the IMF has assisted debtor nations with problems meeting balance of payment deficits on condition they insitute reforms in line with neo-liberal and classical economic theory. Arguably there has been a qualification of this stance with the recent HIPC initiatives, but it is safe to conclude that the IMF remains a neo-liberal institution, arguably much removed from its original mandate.

Membership Qualifications

A country may apply for membership status within the IMF. The application will be considered, first, by the IMF's Executive Board. After its consideration, the Executive Board will submit a report to the Board of Governors of the IMF with recommendations in the form of a "Membership Resolution." These recommendations cover the amount of quota in the IMF, the form of payment of the subscription, and other customary terms and conditions of membership. After the Board of Governors has adopted the "Membership Resolution," the applicant state needs to take the legal steps required under its own law to enable it to sign the IMF's Articles of Agreement and to fulfill the obligations of IMF membership.

A member's quota in the IMF determines the amount of its subscription, its voting weight, its access to IMF financing, and its allocation of SDRs.

Assistance and Reforms

Part of its mission has become to provide assistance to countries that experience serious economic difficulties. Member states with balance of payments problems may request assistance in the form of loans and/or organizational management of their national economies. In return, the countries are obliged to launch certain reforms, an example of which is the "Washington Consensus".

Statement on IMF Managing Director Dominique Strauss-Kahn

Press Release No. 11/179, May 15, 2011.

“IMF Managing Director Dominique Strauss-Kahn was arrested in New York City. Mr. Strauss-Kahn has retained legal counsel, and the IMF has no comment on the case; all inquiries will be referred to his personal lawyer and to the local authorities. [1]

John Lipsky has been announced on 15 May 2011 to temporarily replace Strauss-Kahn as the IMF's CEO.

External links

References

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