International Monetary Fund
In the 1930s, many countries faced economic problems. Some of such problems were falling standard of living and unemployment by large number of people. Trading between different countries also came down. Some countries reduced the value of their currencies. All such factors combined and an economic depression resulted. By late 1939, the Second World War had started.
After the Second World War was over, most countries found that the international value was not smooth and faced many restrictions. Leaders of many countries thought over these matters and discussed them in meetings. Thus, after the Second World War, many countries felt the need to have an organization to get help in monetary matters between countries. To begin with, 29 countries discussed the matter, and signed an agreement. The agreement was the Articles of Association of the International Monetary Fund. The International Monetary Fund came into being in 29th December 1945.
Any country may apply to become a member of the IMF. When a country applies for membership, the IMF’s Executive Board examines the application. If found suitable, the Executive Board gives its report to IMF’s Board of Governors. After the Board of Governor clears the application, the country may join the IMF. However, before joining, the country should fulfill legal requirements, if any, of its own country. Every member has a different voting right. Likewise, every country has a different right to draw funds. This depends on many factors, including the member country’s first subscription to the IMF.
The IMF does a number of supervisory works relating to financial dealings between different countries. Some of the works done by IMF are:
- Helping in international trade, that is business between countries
- Looking after exchange rates
- Looking after balance of payments
- Helping member countries in economic development
- It also provides a machinery for international consultations.
A Board of Directors manages the IMF. One tradition has governed the selection of two most senior posts of IMF. Firstly, IMF’s managing director is always European. World Bank's president is always from the United States of America.
Current managing director is French economist Christine Lagarde.
The major countries of Europe and America control the IMF. This is because they have given more money to IMF by way of first subscriptions, and so have larger share of voting rights.
Many people and countries have commented about IMF. Some are good and some are bad comments about the work of IMF. Despite many bad comments about IMF, a research shows that more than 60 percent of Asians and 70 percent of Africans feel that IMF have had a positive effect on their country.