international monetary fund (imf) should the values of the united states be reflected in the conduct...
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International Monetary Fund (IMF)
Should the values of the United States be reflected in the conduct of the International Monetary Fund?
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International Monetary Fund
• Historical Background
• IMF Mission
• Scope of Organization
• Membership & Governance
• Financial Overview
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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
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Mission
• Achieve International Financial Stability and CooperationKeep 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 problemsAdvise member nations on Macroeconomic policy
issues such as interest rates and investment levels
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Scope of Organization• Work with United Nations/World Bank Members States
• Lend Money to Member Nations
• Set Currency Reserve Amounts (dues) for Member Nations
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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.
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Financial Overview
• Historical Finances Began Operating with US$ 9 Billion Equivalent By the Early 1980’s the IMF had ~ US$50 Billion The IMF Today has US$265 Billion Equivalent
• Some Example Lending Belgium took first loan of US$50 Million in 1952 to bolster currency
reserves for their central bank Loaned US$36 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 US$1 Billion by arranging credit of an additional US$2.98 Billion for transitional financial support to prevent complete economic collapse.
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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 US$1.37
• The IMF can also borrow funds to supplement Reserves
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Conclusion
Should the values of the United States be reflected in the conduct of the International Monetary Fund?