International Monetary Fund (IMF)

1
International Monetary Fund (IMF)

• Should the values of the United States be
  reflected in the conduct of the International
  Monetary Fund?

2
International Monetary Fund

• Historical Background
• IMF Mission
• Scope of Organization
• Membership Governance
• Financial Overview

3
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

4
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

5
Scope of Organization

• Work with United Nations/World Bank Members
  States
• Lend Money to Member Nations
• Set Currency Reserve Amounts (dues) for Member
  Nations

6
Membership Governance

• 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.

7
Financial Overview

• Historical Finances
• Began Operating with US 9 Billion Equivalent
• By the Early 1980s the IMF had US50 Billion
• The IMF Today has US265 Billion Equivalent
• Some Example Lending
• Belgium took first loan of US50 Million in 1952
  to bolster currency reserves for their central
  bank
• Loaned US36 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 US1
  Billion by arranging credit of an additional
  US2.98 Billion for transitional financial
  support to prevent complete economic collapse.

8
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 US1.37
• The IMF can also borrow funds to supplement
  Reserves

9
Conclusion

• Should the values of the United States be
  reflected in the conduct of the International
  Monetary Fund?