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Introduction
IMF is a forum of national economic policies,
international monetary and financial systems, Which involves active dialogue with each member Country. When there is a country where has a serious finance problem, other countries loan the money for the poor country. IMF is a kind of association among the countries to prepare the situation when the nation bank of country is bankrupted. IMF is an administrative unit that is international in nature and whose objective is to regulate and administer the financial system of the world.
IMF
IMF headquarters is in Washington D.C , U.S.A Five largest shareholders are United States, Japan,
Germany, France, United Kingdom. China, Russia, and Saudi Arabia have their own seats on the Board. 16 other Executive Directors are elected for two year terms by groups of countries, known as Constituencies. Total quotas of $312 billion; outstanding loans of $71 billion to 82 countries (According to the report of August 31, 2005). The International Monetary Fund (IMF) is an organization of 186 coutries .
Purpose of IMF
The International Monetary Fund (IMF) maintains
silver were used as money. Some countries were on the gold standard, some on the silver standard, some on both. Both gold and silver were used as international means of payment and the exchange rates among currencies were determined by either their gold or silver contents. Greshams Law implied that it would be the least valuable metal that would tend to circulate.
There was two-way convertibility between gold and national currencies at a stable ratio.
Gold could be freely exported or imported.
standard provided an environment that was conducive to international trade and investment.
Misalignment of exchange rates and international
Conti..
There are shortcomings:
The
supply of newly minted gold is so restricted that the growth of world trade and investment can be hampered for the lack of sufficient monetary reserves.
Even
if the world returned to a gold standard, any national government could abandon the standard
predatory depreciations of their currencies as a means of gaining advantage in the world export market. Attempts were made to restore the gold standard, but participants lacked the political will to follow the rules of the game. The result for international trade and investment was profoundly detrimental.
Woods, New Hampshire. The purpose was to design a postwar international monetary system. The goal was exchange rate stability without the gold standard. The result was the creation of the IMF and the World Bank.
Conti
Under the Bretton Woods system, the U.S. dollar was
pegged to gold at $35 per ounce and other currencies were pegged to the U.S. dollar. Each country was responsible for maintaining its exchange rate within 1% of the adopted par value by buying or selling foreign reserves as necessary. The Bretton Woods system was a dollar-based gold exchange standard.
Central banks were allowed to intervene in the exchange rate markets to iron out unwarranted volatilities.
asset.
Non-oil-exporting countries and less-developed
to finance the reconstruction of countries affected by WWII help with development of impoverished nations
IBRD
ESTABLISHMENT: Bretton Woods, 1944 OBJECTIVES: long-term financing of after-war reconstruction and long-term financing of development of less developed member countries (developing countries and countries in transition) MEMBERSHIP: IBDF with global membership
IBRD
Evolution of activities and changing priorities
second half of the 1940s and first half of the 1950s: financing economic reconstruction of countries that were affected most during World War II second half of the 1950s: long-term financing of economic development 1960s: financing big industrial and infrastructure objects
1970s: socio-economic development goals: growth, poverty reduction, securing basic needs of the population financing integral programs of countryside development, heakth and education projects, securing clean water access, sanitary services, apartment building and urban area development
1980s: project and balance-of-payments financing ecological aspects of economic development 1990s: Washington Consensus poverty reduction programs, institutional capabilities strengthening and anticorruption programs, programs oriented towards cooperation with the private sector as well as non-government organizations
contii
Sources of funds: basic financial source is capital borrowing in international capital markets reserves and debt repayments for loans approved in previous years Loans as a prevailing form of the allocation of funds: terms of the loans: favorable commercial loans, payment term between 12 and 20 years (3-5 years of principal payment deferral), variable interest rate, unconditional insurance with the borrowing country guarantee preferred creditor
IBRD continued
Lends to countries with relatively high per capita
development projects (i.e. highways, schools) programs to help governments change the way they manage their economies
Callable
portion
Capital
of the subscriptions that the Bank borrows the Bank charges a rate of interest rate on its loans to pay this back