Presentation 17 - The IMF and the World Bank - The IMF and...

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The IMF and the World BankEcon 314Lecture 17
International Monetary FundThe International Monetary (IMF) is aninternational organization that oversees theglobal financial system by following themacroeconomic policies of its member countries,in particular those with an impact on exchangerates and the balance of payments. It is anorganization formed to stabilize internationalexchange.
International Monetary FundEstablished in 1944.Formally organised on December 27th,1945Member states – 187Headquarters – Washington DC
Purpose of the IMF(i)To promote international monetary cooperation(ii)Expansion and growth of international trade(iii)To promote stability of exchange rates(iv)To assist in the establishment of a multilateral system ofpayments .(v)To reduce the extent of disequilibrium in internationalbalance of payments.
Sources of funds for the IMFThe quota subscriptionsHoldings of GoldBorrowing arrangements (GABS)Interest charges and fees
Work of the IMFSurveillance – oversees the international monetary systemand monitors the financial and economic policies of themember states. It keeps track of the economic developmentson a national, regional and global basis.Lending – Provides loans to countries that cannot otherwisemeet their international payment obligations and cannototherwise find adequate financing on affordable terms.Technical Assistance – Assists low and middle incomecountries in managing their economies. Provides trainingand guidance on mechanisms to upgrade institutions anddesign macroeconomic and structural policies.
Special Drawing RightsThe SDR is an international reserveasset, created by the IMF to supplementthe existing official reserves of themember countries. This was introducedin 1969.
Valuation of the SDRSDR was initially equivalent to 0.888671grams fine gold.Currently, it consists of the Euro, the Yen,the Pound Sterling and the U.S. Dollar.The value is revised after five years.
Wednesday, March 28, 2012CurrencyCurrencyamount underRule O-1Exchangerate1U.S. dollarequivalentPercent changein exchangerate againstU.S. dollar frompreviouscalculationEuro0.42301.334700.564578-0.052Japanese yen12.100083.000000.145783-0.205Pound sterling0.11101.591500.176657-0.244U.S. dollar0.66001.000000.6600001.547018U.S.$1.00 = SDR0.64640520.0663SDR1 = US$1.547024SDR Valuation
What are quotas?
Determination of the quotas of member countriesWhen a country joins the IMF, it is assigned an initial quota inthe same range as the quotas of existing members that arebroadly comparable in economic size and characteristics. TheIMF uses a quota formula to guide the assessment of amember’s relative position.

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Term
Fall
Professor
rakovski
Tags
International Monetary Fund, member countries, International Monetary and Financial Committee

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