The IMF that is the International Monetary Fund is an international organization that is responsible for managing the global financial system. For this purpose, the International Monetary Fund uses the special macroeconomic policies of its member countries (more than 186). The IMF basically manages the balance of payments and exchange rates across the globe. It is an international organization that was primarily created for facilitating the development and stabilizing the international exchange rates of member countries. Now, it also provides highly leveraged loans, especially to the poorer countries. The headquarter of the IMF is situated in Washington DC in the United States of America.
Purpose of the organization
The International Monetary Fund was formed in July 1946. In the initial days, the IMF comprised 45 member countries. The primary goal of the IMF was to assist the countries for the reconstruction of the global payment system and to stabilize the foreign exchange rates. The member countries created a common money pool which could be used for borrowings (on temporary basis), by the countries suffering from payment imbalances. The foundation of the IMF was very crucial for the world because it helped to re-stabilize the global economic systems after the Second World War. The IMF still plays a very important role in improving the economies of its member countries.
On June 29, 2009 the IMF described itself as “an organization of 186 countries that is working to foster global monetary cooperation, reduce poverty, secure financial stability, promote high employment and facilitate international trade “. With the exceptions of North Korea, Taiwan (that was expelled from the organization in year 1980), Cuba (that left the organization in year 1964), Monaco, Andorra, Tuvalu, Nauru and Liechtenstein, all the other UN members show direct participations in IMF meetings. A 24-member executive board represents the member states (in this executive board, five executive directors come from those five members that share largest quotas in IMF pool, nineteen executive directors come from the remaining members of the IMF).
History of the IMF
The International Monetary Fund was proposed in July of 1944 during the Monetary and Financial Conference of United Nations. Afterwards, the representatives of the 45 governments met in the United States (Mount Washington Hotel, Bretton Woods, New Hampshire,). In the meeting, all the delegates realized the immediate need for a common platform for international economic cooperation. As a result, the IMF was formally structured on December 27 of 1945. Initially, 29 countries signed the Articles of Agreement. The primary objective of the IMF is still the same as when it was founded in the year 1943.
The International Monetary Fund today
The IMF’s importance in the global economic setup slowly increased as it added more members to its list. The number of member countries in IMF has risen to four times in the last few decades. Political independence attained by many developing countries and the collapse of the Soviet Union, contributed a lot in enhancing the number of the member countries. At the G-20 London summit of 2009, it was formally announced that the IMF will require some additional financial resources (due to the recent global financial crisis) to meet the financial needs of its current member countries.