2 multiple exchange rates in this system a government

2.
Multiple exchange rates – In this system, a government sets
different exchange rates for different types of transactions.
3.
Import deposit requirement – Some governments require an
import deposit, that is, a deposit prior to the release of foreign
exchange.
4.
Quantity controls – With quantity controls, the government
limits the amount of foreign currency that can be used in a
specific transaction.
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International Business Management
Module – 8
The International Monetary System
In 1944 major western countries met at Bretton Woods, New Hampshire,
USA, to determine the international institutions that were needed to
bring relative economic stability and growth to the free world. As a
result of the meetings, the International Monetary Fund (IMF) and the
International Bank for Reconstruction and Development (IBRD)
popularly known as the World Bank were organized in 1945.
International Monetary Fund (IMF) was to provide short-term assistance
to correct the balance of payment disequilibrium while the IBRD or the
World Bank was to provide long-term assistance for the reconstruction
and development of the economies of member countries.
International Monetary Fund (IMF)
The IMF was organized to promote exchange rate stability and facilitate
the international flow of currencies. Its objectives are:

To promote exchange rate stability for currency conversions

To maintain orderly exchange rate arrangements

To avoid competitive currency devaluation

To establish a multi-lateral system of payments

To eliminate exchange restrictions

To create standby reserves
Its functions are:

It aims to reduce tariffs and other trade restrictions

It gives technical advice to members regarding monetary
and fiscal policies

It functions as a lending institution of foreign currencies

It provides machinery for altering the par values of the
currencies in order to improve long-term BOP (Balance Of
Payment) position of the member countries

It conducts research studies and publishes the reports

It conducts short-term training courses for the employees of
member countries on fiscal, monetary and BOP through its various
departments, and the IMF Institute.
Its Organization structure is given below.

Board of Governors – Member countries appoint one
governor and an alternate governor to this board. The governor
has votes based on that country’s quota, which he can exercise in
this board. The alternate governor has the voting right only when
the governor is absent.

Executive Board – It has 21 members; one each from USA,
UK, France, Japan, Germany, and Saudi Arabia, plus 15 elected
members. The board has a managing director. This Board looks
after IMF’s day-to-day business.

Apart from the above there are two committees. They report
to the Board of Governors. They are:
1.