International Monetary Fund

Infobox Central bank
bank_name =
bank_name_in_local = International Monetary Fund
image_1 = IMF.pngimage_title_1 = IMF member states in green
headquarters = Washington, D.C., USA
president = Dominique Strauss-Kahn
leader_title = Managing Director
bank_of =
currency = Special Drawing Rights
currency_iso = XDR
borrowing_rate = 3.49% for SDRs [ [http://www.imf.org/external/np/fin/data/param_rms_mth.aspx Exchange Rate Archives by Month ] ]
deposit_rate =
website = [http://www.imf.org www.imf.org]
footnotes =
succeeded =
The International Monetary Fund (IMF) is an international organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rates and the balance of payments. It also offers financial and technical assistance to its members, making it an international lender of last resort. Its headquarters are located in Washington, D.C., USA.

Organization and purpose

The International Monetary Fund was created in 1944 [http://www.imf.org/external/np/exr/facts/glance.htm] , with a goal to stabilize exchange rates and supervise the reconstruction of the world's international payment system. Countries contributed to a pool which could be borrowed from, on a temporary basis, by countries with payment imbalances. (Condon, 2007)

The IMF describes itself as "an organization of 185 countries (Montenegro being the 185th, as of January 18, 2007), working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty". With the exception of North Korea, Cuba, Andorra, Monaco, Liechtenstein, Tuvalu, and Nauru, all UN member states participate directly in the IMF. Most are represented by other member states on a 24-member Executive Board but all member countries belong to the IMF's Board of Governors. ["IMF Articles of Agreement", Article XII [http://www.imf.org/external/pubs/ft/aa/aa12.htm#2 Section 2(a)] and [http://www.imf.org/external/pubs/ft/aa/aa12.htm#3 Section 3(b)] .]

History

The International Monetary Fund was formally created in July 1944 during the United Nations Monetary and Financial Conference. The representatives of 45 governments met in the Mount Washington Hotel in the area of Bretton Woods, New Hampshire, United States of America, with the delegates to the conference agreeing on a framework for international economic cooperation. [Brief video of the Bretton Woods Conference is available at http://www.youtube.com/watch?v=GVytOtfPZe8] The IMF was formally organized on December 27, 1945, when the first 29 countries signed its Articles of Agreement. The statutory purposes of the IMF today are the same as when they were formulated in 1944 ("see #Assistance and reforms").

Today

The IMF's influence in the global economy steadily increased as it accumulated more members. The number of IMF member countries has more than quadrupled from the 44 states involved in its establishment, reflecting in particular the attainment of political independence by many developing countries and more recently the collapse of the Soviet bloc. The expansion of the IMF's membership, together with the changes in the world economy, have required the IMF to adapt in a variety of ways to continue serving its purposes effectively."

In an apparent move to curb the sudden rise of gold prices, and to shore up the falling value of the US Dollar, The International Monetary Fund's executive board approved a broad financial overhaul plan that could lead to the eventual sale of a little over 400 tons of its substantial gold supplies. IMF Managing Director Dominique Strauss-Kahn welcomed the board's decision April 7, 2008 to propose a new framework for the fund, designed to close a projected $400 million budget deficit over the next few years. The budget proposal includes sharp spending cuts of $100 million until 2011 that will include up to 380 staff dismissals. [http://www.imf.org/external/np/sec/pr/2008/pr0874.htm]

Data Dissemination Systems

In 1995, the International Monetary Fund began work on data dissemination standards with the view of guiding IMF member countries to disseminate their economic and financial data to the public. The International Monetary and Financial Committee (IMFC) endorsed the guidelines for the dissemination standards and they were split into two tiers: The General Data Dissemination System (GDDS) and the Special Data Dissemination Standard (SDDS).

The International Monetary Fund executive board approved the SDDS and GDDS in 1996 and 1997 respectively and subsequent amendments were published in a revised “Guide to the General Data Dissemination System”. The system is aimed primarily at statisticians and aims to improve many aspects of statistical systems in a country. It is also part of the World Bank Millennium Development Goals and Poverty Reduction Strategic Papers.

The IMF established a system and standard to guide members in the dissemination to the public of their economic and financial data. Currently there are two such systems: [http://dsbb.imf.org/Applications/web/gdds/gddshome/ General Data Dissemination System] (GDDS) and its superset [http://dsbb.imf.org/Applications/web/sddshome/ Special Data Dissemination System] (SDDS), for those member countries having or seeking access to international capital markets.

The primary objective of the GDDS is to encourage IMF member countries to build a framework to improve data quality and increase statistical capacity building. This will involve the preparation of metadata describing current statistical collection practices and setting improvement plans. Upon building a framework, a country can evaluate statistical needs, set priorities in improving the timeliness, transparency, reliability and accessibility of financial and economic data.

Some countries initially used the GDDS, but lately upgraded to SDDS.

Some entities that are not themselves IMF members also contribute statistical data to the systems:
* – GDDS
* – SDDS
* institutions:
** the European Central Bank for the Eurozone – SDDS
** Eurostat for the whole EU – SDDS, thus providing data from flagcountry|Cyprus (not using any DDSystem on its own) and flagcountry|Malta (using only GDDS on its own)

Membership qualifications

Any country may apply for membership to 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 [http://www.imf.org/external/pubs/ft/aa/aa03.htm#1 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 fulfil the obligations of IMF membership. Similarly, any member country can withdraw from the Fund, although that is rare. For example, in April 2007, the president of Ecuador Rafael Correa announced the expulsion of the World Bank representative in the country. A few days later, at the end of April, Venezuelan president Hugo Chavez announced that the country would withdraw from the IMF and the World Bank. Chavez dubbed both organizations as “the tools of the empire” that “serve the interests of the North”. [http://www.brettonwoodsproject.org/art-554206] As of April 2008, both countries remain as members of both organizations. Venezuela was forced to back down because a withdrawal would have triggered default clauses in the country's sovereign bonds. [http://www.economist.com/world/la/displaystory.cfm?story_id=9149736]

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 Special Drawing Rights (SDRs). A member state cannot unilaterally increase its quota — increases must be approved by the Executive Board and are linked to formulas that include many variables such as the size of a country in the world economy. For example, in 2001, China was prevented from increasing its quota as high as it wished, ensuring it remained at the level of the smallest G7 economy (Canada).Barnett, Michael and Finnemore, Martha. "Rules for the World: International Organizations in Global Politics". Ithaca: Cornell University Press, 2004.] In September 2005, the IMF's member countries agreed to the first round of ad hoc quota increases for four countries, including China. On March 28, 2008, the IMF's Executive Board ended a period of extensive discussion and negotiation over a major package of reforms to enhance the institution's governance that would shift quota and voting shares from advanced to emerging markets and developing countries. The Fund's Board of Governors must vote on these reforms by April 28, 2008. See "Reform of IMF Quotas and Voice: Responding to Changes in the Global Economy" at www.imf.org.

Examples of press coverage of the discussions regarding changes to the voting formula to increase equity: [http://www.npr.org/templates/story/story.php?storyId=5358282 IMF Seeks Role in Shifting Global Economy]

Members' quotas and voting power, and Board of Governors

Table showing the top 21 member countries in terms of voting power:cite news |first= |last= |coauthors= |title=http://www.imf.org/external/np/sec/memdir/members.htm#3 |date= |publisher=IMF |url=http://www.imf.org/external/np/sec/memdir/members.htm#3 |work= |pages= |accessdate=2007-09-24 |language=]

Media representation of the IMF

"Life and Debt" a documentary film, deals with the IMF's policies' influence on Jamaica and its economy from a critical point of view. In 1978, one year after Jamaica first entered a borrowing relationship with the IMF, the Jamaican dollar was still worth more on the open exchange than the US dollar; by 1995, when Jamaica terminated that relationship, the Jamaican dollar had eroded to less than 2 cents US. Such observations lead to skepticism that IMF involvement is necessarily helpful to a third world economy.

[http://www.newsreel.org/nav/title.asp?tc=CN0193 The Debt of Dictators] explores the lending of billions of dollars by the IMF, World Bank multinational banks and other international financial institutions to brutal dictators throughout the world. "(see IMF/World Bank support of military dictatorships)"

See also

* Third world debt
* Economics
* Special Drawing Rights
* Development aid
* Bretton Woods Institutions
* Organisation for Economic Co-operation and Development
* Globalization and Its Discontents
* Globalization and Health
* Bancor
* Bank for International Settlements
* World Bank
* Inter-American Development Bank
* Bretton Woods system
* Global Governance Watch

Notes

References

*cite book |title= [http://www.fondad.org/publications/helpingpoor/contents.htm Helping the Poor? The IMF and Low-Income Countries] |author=Jan Joost Teunissen and Age Akkerman (eds.)|year=2005 |publisher=FONDAD |isbn=90-74208-25-8
*cite book |url=http://econwpa.wustl.edu/eps/if/papers/0207/0207003.pdf |title=The Development and Implementation of IMF and World Bank Conditionality|author=Dreher, Axel |year=2002 |publisher=HWWA |id=ISSN 1616-4814
*cite journal |author=Dreher, Axel |year=2004 |title=A Public Choice Perspective of IMF and World Bank Lending and Conditionality |journal=Public Choice |volume=119 |issue=3–4 |pages=445–464 |doi=10.1023/B:PUCH.0000033326.19804.52
*cite journal |author=Dreher, Axel |year=2004 |title=The Influence of IMF Programs on the Re-election of Debtor Governments |journal=Economics & Politics |volume=16 |issue=1 |pages=53–75 |doi=10.1111/j.1468-0343.2004.00131.x
*cite journal |author=Dreher, Axel |year=2003 |title=The Influence of Elections on IMF Programme Interruptions |journal=The Journal of Development Studies |volume=39 |issue=6 |pages=101–120 |doi=10.1080/00220380312331293597
* "The Best Democracy Money Can Buy" by Greg Palast (2002)
* [http://www.imf.org/external/pubs/ft/exrp/differ/differ.htm The IMF and The World Bank: How do they differ?] by David D. Driscoll
* Rivalries between IMF and IBRD, " [http://www.economist.com/finance/displaystory.cfm?story_id=8786132 Sister-talk] ", The Economist (2007-03-01)
* George, S. (1988). A Fate Worse Than Debt. London: Penguin Books.
* Hancock, G. (1991). Lords of Poverty: The Free-Wheeling Lifestyles, Power, Prestige and Corruption of the Multi-billion Dollar Aid Business. London: Mandarin.
* Rapkin, David P. and Jonathan R. Strand (2005) “Developing Country Representation and Governance of the International Monetary Fund,” World Development 33, 12: 1993-2011.
* Strand, Jonathan R and David P. Rapkin (2005) “Voting Power Implications of a Double Majority Voting Procedure in the IMF’s Executive Board,” in Reforming the Governance of the IMF and World Bank, Ariel Buira, ed, London: Anthem Press.
* Williamson, John. (August 1982). "The Lending Policies of the International Monetary Fund", Policy Analyses in International Economics 1, Washington D.C., Institute for International Economics. ISBN 0-88132-000-5

External links

* [http://www.imf.org International Monetary Fund website]
* [http://www.imf.org/external/pubs/ft/fandd/index.htm Finance & Development - A quarterly magazine of the IMF]
* [http://www.imf.org/external/pubs/ft/ar/ Annual Reports of the Executive Board]
* [http://www.imf.org/external/pubs/ft/weo/weorepts.htm World Economic Outlook Reports]
* [http://www.imf.org/external/pubind.htm IMF Publications]
* [http://blog-pfm.imf.org/pfmblog/fad.html IMF Fiscal Affairs Department (FAD)]
* [http://www.augustreview.com/c/global_banking/ August Review - Global Banking: The IMF]
* [http://www.economist.com/opinion/displayStory.cfm?story_id=2941379 Kenneth Rogoff - The sisters at 60]
* [http://www.serendipity.li/hr/imf_and_dollar_system.htm How the IMF Props Up the Dollar System]
* [http://web.gc.cuny.edu/eusc/activities/paper/schwartz.htm "IMF’s Origins as a Blueprint for Its Future", Anna J. Schwartz, National Bureau of Economic Research]
* [http://www.uiowa.edu/ifdebook/ Center for International Finance & Development] University of Iowa research center, includes a 300 page E-book on the IMF and World Bank.
* [http://www.cepr.net/documents/publications/imf_forecasting_2007_04.pdf Political Forecasting? The IMF’s Flawed Growth Projections for Argentina and Venezuela] by David Rosnick and Mark Weisbrot, Center for Economic and Policy Research
* [http://www.dollarsandsense.org/archives/1999/0799dollar.html What's the difference between the IMF and the World Bank?] by economist Arthur MacEwan, in Dollars & Sense magazine
* [http://www.knology.net/~bilrum/Paul_Prohibit_BanksA.rtf "Monetary Freedom Act"] HR 391, by Congressman Ron Paul, 1981
*"Bretton Woods Project" Critical voices on the World Bank and IMF
* Eurodad report: [http://www.eurodad.org/whatsnew/reports.aspx?id=2206 Critical conditions: The IMF maintains its grip on low-income governments]


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