There are some organizations in the world that look after the global affairs of the people. When the national and state banks are unable to fund the money, they turn to these organizations. One such organization is the international monetary fund. The main headquarters of IMF is located in Washington, DC in the USA. The formal existence of IMF came in 1945 with 29 member countries being a part of it. The primary goal of the international monetary fund was to restructure the payment system internationally.
International Monetary Fund(IMF)
The establishment of the international monetary fund came into existence in July 1944 in the conference in the USA. It was formed alongside world bank which was known as an international bank for development and reconstruction in those days. The conference was attended by 44 nations and was held at Bretton Woods.
Thus, the idea behind this formulation was to develop a framework for economic cooperation. Also, it wanted to avoid any competitive devaluations that led to the Great Depression in the 1930s. Currently, the organization is working to foster financial security and stability, global monetary compensation, promote high employment, international trade, and reduce poverty in the world. It also to achieve sustainable economic growth in the world.
Currently, the international monetary fund works on a quota system. The countries that are members of the IMF contribute their funds to a pool. The countries that are experiencing difficulties in the balance of payments will borrow the money from this pool. There is a board of directors that controls and manages the IMF.
At present, there are 24 directors for each country in the IMF. They all represent the countries that are the members of IMF. Also, the transactions that occur in the IMF are expressed in SDR also known as special drawing right. This is also known as paper gold. The financial year in the IMF starts from May 1 and ends on April 30.
Browse more Topics under International Financial Organisation
One of the founding members in IMF is India. It is also among the top 10 countries in the IMF. The list includes US, Japan, Italy, France, Germany, and so on. IMF has a played a very crucial role in the economy of India. It has provided with the economic assistance whenever required by India.
Furthermore, at the time of determination of policies, it provides appropriate consultancy. Earlier India was among the first five countries that had the highest quota in the IMF. Because of this status, India has been given a permanent position among the executive board of directors in IMF.
Objectives of IMF
- The current regional offices of IMF are in Geneva and Paris.
- Managing director of IMF is Christine Lagarde.
- The objectives of IMF is to stabilize the exchange rates and assist in the restructuring of the payment system globally.
- Furthermore, IMF also manages the economic policies for the global market.
- The countries that have low incomes can borrow the loan on concessional terms.
- It also provides assistance to the countries during the time of emergencies and helps them in maintaining the balance of payments.
Practice Questions on International Monetary Fund
Q. When did international monetary fund come into existence formally?
A. December 1945 B. January 1945 C. March 1945 D. September 1945
Answer: A. December 1945
Q. The headquarters of IMF are in
A. New York B. Geneva C. Washington D. Paris
Answer: C. Washington