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THEINTERNATIONAL MONETARY FUND

By:Krishna ChaitanyaRoll No. 123

Jyotsna ShenoyRoll No.142

Vishi ShrivastavRoll No. 144

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W orld W ar Great Depression

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Formation

The IMF was conceived in July 1944, whenrepresentatives of 45 countries meeting in the town

of Bretton Woods, New Hampshire.The IMF came into formal existence in December 1945, when its first 29 member countries signed itsArticles of Agreement.

Began to expand in the late 1950s and during the1960s as many African countries becameindependent and applied for membership.

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Organization and purpose

The IMF describes itself as an organization of 187countries (as of July 2010)

Working to foster global monetary cooperationSecure financial stabilityFacilitate International TradePromote high employment and sustainableeconomic growthReduce poverty.

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Membership

Membership ResolutionQuota: A member's quota delineates basic aspects

of its financial and organizational relationship withthe IMF includingI. Voting power II. Access to financing

III. SDR allocations

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Governance structure

Board of GovernorsHighest decision-makingbody of the IMF.

Ministerial CommitteeInternational Monetaryand Financial Committee.Development Committee

The Executive Board24 board membersrepresent all 187countries

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Country Representation.

Represents theinterests of its 187member countries.Reforms were broughtrecently in IMF.Quotas and votingshares wereincreased for developing nationsand low Incomecountries.

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Q uotas.

IMF's resources come mainly from the money thatcountries pay as their capital subscription whenthey become members.Quotas broadly reflect the size of each member'seconomy.Determine how much countries can borrow fromthe IMF and their share in allocations of SDR s.

y Quota increased for emerging economies recently.Quota Subscriptions

25% and 75%.

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Special Drawing Rights.

SDR was created byIMF in 1969. Currentlythe amount of SDRsstands at 204.1bn.Its value is based on4 key currencies.SDR play a key roleas an interest bearinginternational reserveasset.

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Surveillance

Monitoring exchange rate, monetary, and fiscalpolicies

Advice on issues such as the choice of exchangerate policies.Assessment of risks and vulnerabilitiesstemming from large and sometimes volatile capitalflows.

The IMF and the World Bank play a central role indeveloping, implementing, and assessinginternationally recognized standards and codes.

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Lending to countries

Country with largeunplayable bills, poses a

risk to the internationalfinancial system.IMF lends money tocountries with financialcrisis. Eg: Ireland, Greece.Loans are given ininstallments with eachinstallment conditional ontargets being met.

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IMF and International Business

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Lending to countries at the time of need

PROS CONSPrevented default Stringent austerity

measures

Saved the eurozone People revolted

PROS CONSBailout package Drastic austerity conditions

Restored confidence in thecurrencies

critics opinion reverse of Keynesian response

Asian financial crisis 1997

Euro crisis 2010

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Promoting emerging economies

BRIC nations in top 10 memberso China greater voting power in the IMF

o shift of more than 6% of quota shares todynamic emerging market

o Boost to IMFs resources by about $733.9billion at current exchange rates

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Shortcomings of the IMF

Austerity measureso Argentina followed IMF policies, yet faced

crisis in 2001

Reform measureso Kenya followed the IMF SAP process and

lost billions due to siphoning

Supporting dictatorshipso Brazil and Argentinao Eg. Castello Branco in 1960s

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Conclusion

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Thanks!!!