Role of International Monetary Fund.The International Monetary Fund (IMF) is an international organization that was initiated in July 1944 at Bretton Woods Conference by 44 participants and formally created in December 1945 by 29 member countries.
IMF was established to promote economic and financial cooperation among its members in order to facilitate the expansion and balanced growth of world trade. It began its operation on March 1, 1947.
10 Role of International Monetary Fund.
- International Monetary Cooperation:
IMF promotes international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration in international monetary problems.
- Expansion and Balanced Growth:
IMF facilitates the expansion and balanced growth of international trade by contributing in the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members.
- Exchange Stability:
IMF promotes exchange stability, to maintain orderly exchange arrafcments among members, and to avoid competitive exchange definition
Establishment of Multilateral System:
IMF assists in the establishment of a multilateral system of payments in respect of current transactions between members and in the nation of foreign exchange restrictions which hamper the growth in world trade.
Head Quarter of IMF is situated in Washington D.C. in USA. Work of fund is carried out through a board of Governors, an executive board, a managing director and staff. Board of Governors is consisting of 188 governors, one from each member country which is usually the minister of finance or the governor of the central bank. Board of Governor has delegated powers of operation to executive board of directors. These executive directors elect a managing director who is chief of the operating staff. Managing director holds office for a five years term. Professional and administrative staff of the fund is composed of international civil servants.
FUNCTIONS:The main functions of IMF are as under:
- Exchange Stability:
IMF tries to establish exchange stability among the member countries. It keeps a strict watch over the exchange rate policies of member countries and advises them when the need arises.
- Balancing Demand and Supply of Currencies:
IMF helps in maintaining balance between demand and supply of various currencies. It purchases the currency of a country which is in great demand and rations its supply among the buyer countries.
- Interest Charges:
IMF charges interest on the credit provided to the countries. The interest on first trench is nominal but it increases as the amount of loan increases.
- Multilateral Payment System:
IMF assists its members in the foundation of world wide multilateral system of payments. It also helps in the elimination of foreign exchange restrictions.
- Information Services:
IMF provides information, technical services and policy advice to r.’cnetrry authorities of member countries.
- Gold Management:
IMF plays a role in managing gold reserves of member countries. It supervises the transfer of gold among different countries and provides assistance in minimizing gold transfers.
- Co-operation with other Institutions:
IMF maintains contact with other international monetary institutions and helps them in achieving their mutual objectives.
- Technical Assistance:
IMF also provides technical assistance to member countries by providing the services of specialists and experts.
Final Recommendation; Role of International Monetary Fund.
Here are some of the main roles of the IMF:
- Economic Surveillance: The IMF monitors global economic developments and provides regular assessments of the economic policies and performance of its member countries. It provides advice to member countries on economic policies to help them maintain stability and avoid financial crises.
- Financial Assistance: The IMF provides financial assistance to member countries experiencing balance of payments difficulties. This assistance can take the form of loans, policy advice, or technical assistance.
- Capacity Building: The IMF provides training and technical assistance to member countries to help them strengthen their economic institutions and improve their economic policies.
- Research: The IMF conducts research on international economic issues and publishes reports, studies, and statistics on various topics such as global economic trends, exchange rate regimes, and financial stability.
- Promotion of International Monetary Cooperation: The IMF promotes international monetary cooperation by facilitating discussions among member countries on economic issues and by providing a forum for cooperation and collaboration among its members.