What is the IMF
The International Monitory Fund was one among the financial institutions that emerged during the United Nations financial conference that was held at Bretton woods in 1944. This organization came into existence to control international payments that went to a lot of confusion due to Second World War. Today this fund has about 184 countries as its members.
The main of International Monitory Fund is to help the member countries in balancing their financial problems. It also helps the member countries when the currency value falls due to depression. The headquarters of IMF is centered at Washington, DC. This fund gets money that is paid by member countries, since the United Nations is the biggest fund giver it has more voting rights than other countries.
The next question that comes to our mind is the responsibilities of IMF. The main work of IMF is divided into three, the first being observation. This involves closing monitoring the world’s economic and financial developments. This helps in the prevention of any financial crisis that may arise. Keeping a close eye on these developments will definitely help in strapping together the entire world during any kind of crisis.
The second work is to lend money; it gives money to those countries that face balance of payments problems. It helps by giving temporary loans to rectify the core problems. Such kind of loans given to developing countries having low income helps in averting the country going below the poverty line. Third and most important it also provides technical assistance and training to those countries that are technological very far from others.
To support the third cause in recent times the International Monitory Fund has worked towards establishing a standard codes in monitoring and technological assistance. This has helped a lot in intensification of financial sectors. Seeing all these International Monitory Fund gives certain advantages for its members at the same time certain disadvantages as well. The main advantages being:
- When there is a situation where a country is facing currency scarcity, the IMF lends loans to even out the economy.
- IMF also has the right to control the money flow, amend fiscal policies and also privatize other banks.
- It helps in getting a review of the entire economy.
In spite of the benefits it gives to the entire world economy, economic critics are of the opinion that International Monitory Fund is very dominant. It is mainly controlled by what we call the G8 nations who are very much developed in all facets of industrialization. The stringent actions of IMF like amending fiscal policy which is an advantage may actually harm the economy in the long run.
International Monitory Fund has its own issues to be solved like globalization, emerging markets survey, reforming its own governance and monitory issue at IMF. Hence it is not an easy task for IMF also to manage the financial and economic standing of its member countries as well as its own execution of policies.