International Monetary Fund

Examples of International Monetary Fund in the following topics:

• The International Monetary Fund (IMF)

  • 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 IMF Articles of Agreement.
  • The IMF is mandated to oversee the international monetary and financial system and monitor the economic and financial policies of its 188 member countries.
  • If the conditions are not met, the funds are withheld.
  • In the judgment of the fund, the adoption by the member of certain corrective measures or policies will allow it to repay the fund, thereby ensuring that the same resources will be available to support other members.
  • Explain how the International Monetary Fund (IMF) aids its 188 member countries

• The International Monetary Structure

  • The main components in the international monetary structure are global institutions (such as the International Monetary Fund and Bank for International Settlements), national agencies and government departments (such as central banks and finance ministries), private institutions acting on the global scale (such as banks and hedge funds), and regional institutions (like the Eurozone or NAFTA).
  • The most prominent international institutions are the International Monetary Fund (IMF) , the World Bank, and the World Trade Organization (WTO).
  • This includes commercial banks, hedge funds and private equity, pension funds, insurance companies, mutual funds, and sovereign wealth funds.
  • Governments are also a part of the international monetary structure, primarily through their finance ministries: they pass the laws and regulations for financial markets, and set the tax burden for private players such as banks, funds, and exchanges.
  • Setting up a system of rules, institutions, and procedures to regulate the international monetary system, the planners at Bretton Woods established the IMF and the International Bank for Reconstruction and Development (IBRD), which today is part of the World Bank Group.

• The World Bank

  • The World Bank differs from the World Bank Group, in that the World Bank comprises only two institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), whereas the former incorporates these two in addition to three more: International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID).
  • The International Bank for Reconstruction and Development (IBRD) has 188 member countries, while the International Development Association (IDA) has 172 members.Each member state of IBRD should be also a member of the International Monetary Fund (IMF), and only members of IBRD are allowed to join other institutions within the Bank (such as IDA).
  • Forty-five countries pledged $25.1 billion in "aid for the world's poorest countries," aid that goes to the World Bank International Development Association (IDA) which distributes the loans to 80 poorer countries.

• Trade

  • International trade is the exchange of goods and services across national borders.
  • This system of monetary management established the rules for commercial and financial relations among the world's major industrial states, and was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states.
  • The agreement set up rules and institutions to regulate the international political economy, resulting in the creation of organizations such as the the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (later divided into the World Bank and Bank for International Settlements).
  • In 2000, the International Monetary Fund (IMF) identified four basic aspects of globalization: trade and transactions, capital and investment movements, migration and movement of people, and the dissemination of knowledge.
  • Common targets include the World Bank (WB), International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD) and the World Trade Organization (WTO) and free trade treaties like the North American Free Trade Agreement (NAFTA), Free Trade Area of the Americas (FTAA), the Trans Pacific Trade Agreement (TPPA), the Multilateral Agreement on Investment (MAI) and the General Agreement on Trade in Services (GATS).

• The Global Economy

  • To help countries with unmanageable balance-of-payments problems, the Bretton Woods conference created the International Monetary Fund (IMF).
  • The standard IMF remedy was to require strong macroeconomic medicine, including tighter fiscal and monetary policies, in exchange for short-term credits.
  • Foreign investors noticed, and soon flooded the Asian economies with funds.
  • Recognizing that uncertainty and lack of information were contributing to volatility in international financial markets, the IMF also began publicizing its actions; previously, the fund's operations were largely cloaked in secrecy.
  • In some cases, the fund eased its demands for deficit reduction so that countries could increase spending on programs designed to alleviate poverty and protect the unemployed.

• International Exchange of Money

  • This was called the Bretton Woods system and included the creation of the IMF (International Monetary Fund).
  • The modern foreign exchange market began forming during the 1970s after three decades of government restrictions on foreign exchange transactions (the Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states after World War II), when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.

• Capitalism in a Global Economy

  • World economy is typically judged in monetary terms, even in cases in which there is no efficient market to help valuate certain goods or services, or in cases in which a lack of independent research or government cooperation makes establishing figures difficult.
  • The main players are global institutions, such as International Monetary Fund, World Bank, and the Bank for International Settlements; national agencies and government departments (e.g., central banks and finance ministries); private institutions acting on the global scale (e.g., banks, hedge funds), and regional institutions such as the Eurozone.

• Globalization and the U.S.

  • In 2000, the International Monetary Fund (IMF) identified four basic aspects of globalization: trade and transactions, capital and investment movements, migration and movement of people, and the dissemination of knowledge.
  • Formally known as the United Nations Monetary and Financial Conference, the conference was a gathering of 730 delegates from all 44 Allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire, United States, to regulate the international monetary and financial order after the conclusion of World War II.
  • Out of the conference came an agreement by major governments to lay down the framework for international monetary policy, commerce, and finance, as well as the founding of several international institutions intended to facilitate economic growth by lowering trade barriers.
  • Other institutions, including the International Bank for Reconstruction and Development (the World Bank) and the International Monetary Fund (IMF), have been facilitated by advances in technology, which have reduced the costs of trade and trade negotiation rounds, originally under the auspices of the GATT.
  • Supranational institutions such as the European Union, the WTO, the G8 ("Group of Eight"), and the International Criminal Court serve to replace or extend national functions to facilitate international agreement.

• Fixed Exchange Rates

  • Unfortunately, the Mexican government could not finance the large trade deficits as it depleted its reserve funds.
  • International investors cashed in their Mexican stocks and bonds and began massive capital withdrawals from Mexico.
  • The Bank of International Settlements and International Monetary Fund (IMF) bailed out Mexico with a $53 billion package, which stabilized the world's financial markets.
  • International investors are attracted to high interest rates.
  • Thus, it cannot support an independent monetary policy because the central bank must maintain the fixed exchange rate.

• Time Lags and Targets

  • The Fed cannot influence the monetary policy goals directly.
  • Operating targets are the federal funds rate and non-borrowed reserves.
  • Federal funds rate is the interest rate that banks charge for lending their excess reserves to other banks.
  • When the Fed uses open-market operations, changes discount policy, or alters reserve requirement, the Fed's monetary policy has an immediate impact on the federal funds rate and non-borrowed reserves.
  • International investors invest in countries with high real interest rates.