International Monetary Fund

International Monetary Fund (IMF), specialized agency of the United Nations, established in 1945. It was planned at the Bretton Woods Conference (1944), and its headquarters are in Washington, D.C. There is close collaboration between it and the International Bank for Reconstruction and Development. The organization, using a fund subscribed by the member nations, purchases foreign currencies on application from its members so as to discharge international indebtedness and stabilize exchange rates. The IMF currency reserve units are called Special Drawing Rights (SDRs); from 1974 to 1980 the value of SDRs was based on the currencies of 16 leading trading nations. Since 1980 it has been reevaluated every five years and based on the relative international economic importance of the British pound sterling, the European Union euro (formerly the French franc and German mark), the Japanese yen, and the U.S. dollar. To facilitate international trade and reduce inequities in exchange, the fund has limited power to set the par value of currencies. Members are provided with technical assistance in making monetary transactions. In 1995 the fund moved to increase disclosure requirements of countries borrowing money and at the same time created an emergency bailout fund for countries in financial crisis. IMF was criticized in 1998 for exacerbating the Asian financial crisis, through the fund's decision to require Asian nations to raise their interest rates to record levels. The fund is ruled by a board of governors, with one representative from each nation. The board of governors elects an executive board of some 20 representatives to conduct regular operations. There are 184 members in the IMF.

Bibliography

See studies by H. G. Grubel (1970), T. Agmon et al., ed. (1984); R. D. Hormats (1987), and T. Ferguson(1988).

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International Monetary Fund (IMF)

International Monetary Fund headquarters, Washington, D.C.

(credit: Courtesy, International Monetary Fund)

Specialized agency of the United Nations system. It was conceived at the Bretton Woods Conference (1944) and officially founded in 1945 as a voluntary cooperative institution to help ensure the smooth international buying and selling of currency. More than 180 countries are members of the IMF. Its principal functions are stabilizing currency-exchange rates, financing the short-term balance-of-payments deficits of member countries, and providing advice and technical assistance to borrowing countries. Members contribute operating funds and receive voting rights according to their volume of international trade, national income, and international reserve holdings; the U.S. holds in excess of one-sixth of the voting rights, more than twice the percentage of any other member. The IMF has no coercive power over members, but it can refuse to lend money to members that do not agree to adhere to its policies; as a last resort it can ask members to withdraw from the organization. Critics of the IMF contend that the austerity and privatization measures it requires of borrowing countries reduce economic growth, deepen and prolong financial crises, and create severe hardships for the world's poorest people. See also International Bank for Reconstruction and Development; World Bank.