Transcript International Monetary Fund

International Monetary Fund (IMF)
Should the values of the United States be
reflected in the conduct of the International
Monetary Fund?
International Monetary Fund
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Historical Background
IMF Mission
Scope of Organization
Membership & Governance
Financial Overview
Historical Background
• UN Bretton Woods Agreement – 1944
 Created both the World Bank and IMF
• The World Bank arranges long term loans to help
developing countries
• The IMF was created to support orderly international
currency exchanges and to help nations having balance of
payment problems through short term loans of cash
Mission
• Achieve International Financial Stability and
Cooperation
 Keep sufficient cash reserves for each member nation
to avoid financial crises due to currency instability
• Promote Economic Growth
 Loan reserve assets to member nations that have
financial or balance of payments problems
 Advise member nations on Macroeconomic policy
issues such as interest rates and investment levels
Scope of Organization
• Work with United Nations/World Bank Members States
• Lend Money to Member Nations
• Set Currency Reserve Amounts (dues) for Member
Nations
Membership & Governance
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United Nations Chartered
184 Member States
Board of Governors (1 from Each State)
Managing Director
Executive Board (24 Members)
Weighted Voting System
 US Representative holds 17% of total Voting Power
 27 Countries together hold 1.4% of total Voting Power
 Decisions are most often made by consensus, rather than
fractious parliamentary fights.
Financial Overview
• Historical Finances
 Began Operating with US$ 9 Billion Equivalent
 By the Early 1980’s the IMF had ~ US$50 Billion
 The IMF Today has US$265 Billion Equivalent
• Some Example Lending
 Belgium took first loan of US$50 Million in 1952 to bolster currency
reserves for their central bank
 Loaned US$36 Billion to Indonesia, Korea, and Thailand during the
Asian financial crises of 1997-1998
 Most recently, the IMF saved Argentina from defaulting on a World
Bank payment of US$1 Billion by arranging credit of an additional
US$2.98 Billion for transitional financial support to prevent complete
economic collapse.
Financial Overview
• Members pay IMF quota in Tradable Currencies
 (Japanese Yen, U.K. Pounds, or U.S. Dollars)
• National quotas are determined by size and strength of
member nations economy
• IMF Acct. Unit is SDR (Special Drawing Rights)
 1 SDR roughly equivalent to US$1.37
• The IMF can also borrow funds to supplement Reserves
Conclusion
Should the values of the United States be
reflected in the conduct of the International
Monetary Fund?