Wikipedia

International Monetary Fund

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International Monetary Fund

Official logo for the IMF

Adopted: July 22, 1944 (67 years Formation ago) Entered into force: December 27, 1945 (66 years ago)

Type

International Economic Organization

Headquarters

Washington, D.C. United States

Membership

185 nations (founding); 188 nations (to date)

Official languages

English, French, and Spanish

Managing Director

Christine Lagarde

Main organ

Board of Governors

Website

www.imf.org

The International Monetary Fund (IMF) is an international organization that was created on July 22, 1944 at the Bretton Woods Conference and came into existence on December 27, 1945 when 29 countries signed the Articles of Agreement[1]. It originally had 45 members. The IMF's stated goal was to stabilize exchange rates and assist the reconstruction of the worlds international payment system post World War II. Countries contribute money to a pool through a quota system from which countries with payment imbalances can borrow funds on a temporary basis. Through this activity and others such as surveillance of its members' economies and policies, the IMF works to improve the economies of its member countries.[2] The IMF describes itself as an organization of 188 countries (as of April 2012), working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty. The organization's stated objectives are to promote international economic cooperation, international trade, employment, and exchange rate stability, including by making financial resources available to member countries to meet balance of payments needs.[3] Its headquarters are in Washington, D.C.

Contents

1 History 2 Member countries o 2.1 Qualifications o 2.2 Benefits 3 Leadership o 3.1 Board of Governors o 3.2 Executive Board o 3.3 Managing Director 4 Voting power o 4.1 Effects of the quota system 4.1.1 Developing countries 4.1.2 United States influence 4.1.3 Overcoming borrower/creditor divide 5 Functions o 5.1 Surveillance of the global economy o 5.2 Conditionality of loans 5.2.1 Benefits 5.2.2 Criticisms o 5.3 Reform 6 Use

History

IMF "Headquarters 1" in Washington, D.C. The International Monetary Fund was originally created as part of the Bretton Woods system exchange agreement in 1944.[4] During the Great Depression, countries sharply raised barriers to foreign trade in an attempt to improve their failing economies. This led to the devaluation of national currencies and a decline in world trade.[5] This breakdown in international monetary cooperation created a need for oversight. The representatives of 45 governments met in the Mount Washington Hotel in the area of Bretton Woods, New Hampshire in the United States, and agreed on a framework for international economic cooperation to establish post-World War II. The participating countries were concerned with the rebuilding of Europe and the global economic system after the war.[6]

Member countries

IMF member states IMF member states not accepting the obligations of Article VIII, Sections 2, 3, and 4[13] The members of the IMF are 187 members of the UN and the Republic of Kosovo[a].[14][15] All members of the IMF are also International Bank for Reconstruction and Development (IBRD) members and vice versa.[citation needed] Former members are Cuba (which left in 1964)[16] and the Republic of China, which was ejected from the UN in 1980 after losing the support of then U.S. President Jimmy Carter and was replaced by the People's Republic of China.[17] Apart from Cuba, the other states that do not belong to the IMF are North Korea, Andorra, Monaco, Liechtenstein, Nauru, Cook Islands, Niue, Vatican City, and the states with limited recognition (other than Kosovo).

Qualifications
Any country may apply to be a part of the IMF. Post-IMF formation, in the early postwar period, rules for IMF membership were left relatively loose. Members needed to make periodic membership payments towards their quota, to refrain from currency restrictions unless granted IMF permission, to abide by the Code of Conduct in the IMF Articles of Agreement, and to provide national economic information. However, stricter rules were imposed on governments that applied to the IMF for funding.[18] The countries that joined the IMF between 1945 and 1971 agreed to keep their exchange rates secured at rates that could be adjusted only to correct a "fundamental disequilibrium" in the balance of payments, and only with the IMF's agreement.[19]

Benefits
Member countries of the IMF have access to information on the economic policies of all member countries, the opportunity to influence other members economic policies, technical assistance in banking, fiscal affairs, and exchange matters, financial support in times of payment difficulties, and increased opportunities for trade and investment[20]

Leadership
Board of Governors
The Board of Governors consists of one governor and one alternate governor for each member country. Each member country appoints its two governors. The Board normally meets once a year and is responsible for electing or appointing executive directors to the Executive Board. While the Board of Governors is officially responsible for approving quota increases, special drawing right allocations, the admittance of new members, compulsory withdrawal of members, and amendments to the Articles of Agreement and By-Laws, in practice it has delegated most of its powers to the IMF's Executive Board. [21] The Board of Governors is advised by the International Monetary and Financial Committee and the Development Committee. The International Monetary and Financial Committee has 24 members and monitors developments in global liquidity and the transfer of resources to developing countries.[22] The Development Committee has 25 members and advises on critical development issues and on financial resources required to promote economic development in developing countries. They also advise on trade and global environmental issues.[23]

Executive Board
24 Executive Directors make up Executive Board. The Executive Directors represent all 188 member-countries. Countries with large economies have their own Executive Directo, but most countries are grouped in constituencies representing four or more countries.[24] Following the 2008 Amendment on Voice and Participation, eight countries each appoint an Executive Director: the United States, Japan, Germany, France, the United Kingdom, China, the Russian Federation, and Saudi Arabia.[25] The remaining 16 Directors represent

constituencies consisting of 4 to 22 countries. The Executive Director representing the largest constituency of 22 countries accounts for 1.55% of the vote.

Managing Director
The IMF is led by a Managing Director, who is head of the staff and serves as Chairman of the Executive Board. The Managing Director is assisted by a First Deputy Managing Director and three other Deputy Managing Directors.[26]Historically the IMFs managing director has been European and the president of the World Bank has been from the United States. However, this standard is increasingly being questioned and competition for these two posts may soon open up to include other qualified candidates from any part of the world.[27][28] In 2011 the world's largest developing countries, the BRIC nations, issued a statement declaring that the tradition of appointing a European as managing director undermined the legitimacy of the IMF and called for the appointment to be merit-based.[28][29]The head of the IMF's European department is Antnio Borges of Portugal, former deputy governor of the Bank of Portugal. He was elected in October 2010.[30]

Dates Name May 6, 1946 May 5, 1951 Camille Gutt August 3, 1951 October 3, 1956 Ivar Rooth November 21, 1956 May 5, 1963 Per Jacobsson September 1, 1963 August 31, 1973 Pierre-Paul Schweitzer September 1, 1973 June 16, 1978 Johannes Witteveen June 17, 1978 January 15, 1987 Jacques de Larosire January 16, 1987 February 14, 2000 Michel Camdessus May 1, 2000 March 4, 2004 Horst Khler June 7, 2004 October 31, 2007 Rodrigo Rato November 1, 2007 May 18, 2011 Dominique Strauss-Kahn July 5, 2011 Christine Lagarde

Nationality Belgium Sweden Sweden France Netherlands France France Germany Spain France France

On June 28, 2011, Christine Lagarde was named Managing Director of the IMF, replacing Dominique Strauss-Kahn. Previous Managing Director Dominique Strauss-Kahn was arrested in connection with charges of sexually assaulting a New York room attendant. Strauss-Kahn subsequently

resigned his position on May 18.[31] On June 28, 2011 Christine Lagarde was confirmed as Managing Director of the IMF for a five-year term starting on July 5, 2011.[32][33]