International Monetary Fund (IMF) and its main functions

The International Monetary Fund (IMF) is an international organization that works to track the global economic status of its member countries. It provides economic and technical support to its member countries. This organization helps keep the international exchange rates stable and facilitates development. Its headquarter is in Washington, D.C. IMF has special currency SDR (Special drawing rights). IMF was established in 27 December 1945.

Some important information about the IMF

(i) International Monetary Fund (IMF) was established in 27 December 1945 at the Bretton Woods Conference United States (U.S).

(ii) The current CEO of the IMF is Christine Lagarde.

(iii) Its headquarter is in Washington DC.

(iv) There are 189 members of the IMF.

(v) IMF’s objective to protect economic stability, promote economic progress, reduce poverty, promote employment and facilitate international business.

(vi) This institution works for monitor the global economic status of its member countries.

(vii) IMF currency is SDR (Special drawing rights).

Some main functions of IMF

(i) Encourage International Monetary Corporation.

(ii) Promoting balanced development of international trade.
Stabilization of exchange rates.

(iii) Providing financial assistance to member countries in case of problems of balance of payment.

(iv) Solving the problems in international payments and reduce its time durations.

Membership of IMF

(i) Currently number of member countries is 189.

(ii) In IMF each member country has two posts, one governor and other alternative governor.

(iii) When the governor is absent, then the alternate governor gets the right to vote.

(iv) The governor of all countries is formed by the IMF’s Board of Governors (BOG).

(v) The IMF is governed by a Board of Governors.

IMF (International Monetary Fund) Quota

The powers of voting for every governor included in the Board of Governors, depends on the quota authority of that country.
The governor gets an additional vote on every one lakh SDRs. Thus , the higher amount of SDR quota the countries have the higher voting power.

Special drawing rights –SDR

(i) The IMF’s capital is created by member countries.

(ii) The entire transaction of the IMF is done in SDR, so it is also called paper gold.

(iii) Until 1971, quota of the IMF member countries used to be in us dollar , but later due to some problems it was made in SDR.

Quota and rank

(i) Currently India quota is 2.76% and 8th rank.

(ii) The IMF reviews the quota of its member countries every five years.

(iii) The finance minister of India is the board of governors of the IMF and the governor of RBI is the alternate governor.

What is SDR (Special drawing rights) ?

SDR is a special type of reserve currency created by the International Monetary Fund (IMF) in 1969 as a supplementary international reserve asset. In view of the fluctuations in dollar and gold were going on, the IMF created this currency in artificial form. The value of the SDR is based on a basket of five major currencies the US dollar, the euro, the Chinese renminbi (RMB), the Japanese yen, and the British pound sterling. Renminbi was recently added in 2016 to the basket.

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