The IMF. The stated purposes of the IMF were to create international monetary cooperation, to stabilize currency exchange rates, to facilitate the expansion and balanced growth of international trade

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International Monetary Fund

Intro:

        In July 1944, the United Nations Monetary and Financial Conference met in Bretton Woods, New Hampshire, to find a way to rebuild and stabilize the world economy that had been severely devastated by World War II.  One result of the conference was the founding of the International Monetary Fund (IMF) through the signing of its Articles of Agreement by 29 countries.

        The stated purposes of the IMF were to create international monetary cooperation, to stabilize currency exchange rates, to facilitate the expansion and balanced growth of international trade, and to make the IMF’s general resources temporarily available to its members experiencing balance of payments difficulties under adequate safeguards. There were 143 member nations in the IMF in the early 1980’s. Most of the Communist countries, including the Soviet Union, did not join; and, of the Western nations, Switzerland has not participated (Compton’s Interactive Encyclopedia, 1996). However, there are now 184 members (www.imf.org).

        On joining the IMF, each member country contributes a certain sum of money which is known as a quota subscription, as a sort of credit union deposit (). The IMF appraises its members' exchange rate policies within the framework of a comprehensive analysis of the general economic situation and the policy strategy of each member. “The IMF fulfills its surveillance responsibilities through: annual bilateral Article IV consultations with individual countries; multilateral surveillance twice a year in the context of its World Economic Outlook (WEO) exercise; and precautionary arrangements, enhanced surveillance, and program monitoring, which provide a member with close monitoring from the IMF in the absence of the use of IMF resources” (www.imf.org).

         The IMF makes its financial resources available to member countries through a variety of financial windows.  Except for the Enhanced Structural Adjustment Facility (ESAF) drawings, which are loans of other members’ currencies, members benefit themselves of the IMF’s financial resources by drawing on other members' currencies, or SDRs, with an equivalent amount of their own currencies. The IMF levies charges on these drawings and requires that members repay their own currencies from the IMF over a specified time.  There is no debate as to whether there should be a global organization to deal with these sorts of things, but is the IMF the appropriate body to patrol these areas?  More importantly, does the IMF have the right to institute policies and unleash its bureaucratic entities upon these sovereign states?

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        Though, it is important to note that the IMF’s main goal and purpose is to create a simple international trade by the exchange of foreign currencies. Currencies have a value in terms of other currencies and what others are willing to pay for it.  The IMF has effectively eliminated the restrictions on buying and selling national currencies by keeping members informed of each nation’s current value of it’s monetary unit. The IMF is also a research guide that calculates national outputs and how large or small a nation’s economy is for all members to view.  Many countries that lack ...

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