Role Of The International Monetary Fund

2297 words - 9 pages

I, like many people, have always heard about the International Monetary Fund in the news yet never really knew or understood its inner workings, this report over views what the International Monetary Fund is, how it works, and how it is currently involved internationally. The International Monetary Fund (IMF) is a form of world credit union that has 187 countries involved, a near global involvement. The International Monetary Fund’s was founded in the aftermath of World War II in 1945 along with the International Bank for Reconstruction and Development (IBRD) and the General Agreement on Tariffs and Trade (GATT) as an agency of the United Nations. The International Monetary Fund’s goal is to promote trade and exchange stability globally. The 187 members each pay a monetary amount to the International Monetary Fund based on their individual economic size, the current biggest contributor being the United States of America. Some major crises the IMF is involved in are aiding in rebuilding Haiti, the economic crash of Iceland and the financial problems in Greece.

The IFM was formed after the Second World War in 1944 as an agent of the United Nations, and came into formal existence in 1945 after the signing of the Articles of Agreement. The Articles of Agreement was as follows firstly The International Monetary Fund is established and shall operate in accordance with the provisions of this Agreement as originally adopted and subsequently amended. Secondly, to enable the Fund to conduct its operations and transactions, the Fund shall maintain a General Department and a Special Drawing Rights Department. Membership in the Fund shall give the right to participation in the Special Drawing Rights Department. And lastly, Operations and transactions authorized by this Agreement shall be conducted through the General Department, consisting in accordance with the provisions of this Agreement of the General Resources Account, the Special Disbursement Account, and the Investment Account; except that operations and transactions involving special drawing rights shall be conducted through the Special Drawing Rights Department.

The IMF began its operation in 1947 and issued its first loan to France later that year. The formation of the International Monetary Fund took place in Bretton Woods, New Hampshire by 45 represented governments. The IMF looked to create a framework of economic synergy to avoid repeating mistakes like the devaluation that caused the great depression in the 1930’s. The International Monetary Fund’s goal and purpose is to have international monetary cooperation, exchange stability, facilitate the growth of international trade, and make resources available to countries in need and to create multilateral payment systems. The main objective of the Bretton Woods system, where the International Monetary Fund was founded, was to secure peace and maintain it. The depression of the 1930’s left the memories of unemployment,...

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