International Monetary Fund
International Monetary Fund (IMF) is the second international organization next to the World Bank. IMF came into existence in 1945 and it has its headquarters situated in Washington DC. It had 191 countries as its members in the year 2005. The major idea behind establishing the IMF is to create a systematic international monetary system, i.e., assisting system of overseas payments and amendments in
Exchange rates amid national currencies. The main objectives of IMF include:
- To encourage international monetary support through a stable institution,
- To ease expansion of fair growth of international trade and to thereby play a role in the promotion and maintenance of high levels of employment and real income,
- To encourage exchange permanence in order to maintain systematic exchange agreements amid member nations, and
- To aid in the setting up of a multilateral system of payments with regards to present transactions between members.
Functions of IMF
A variety of functions are carried out by the IMF to reach the above mentioned objectives. Some of the chief functions of IMF include:
- Serving as a short-term credit institution;
- Supplying machinery for the systematic amendment of exchange rates;
- Serving as a reservoir of the currencies of all the member nations, so that a borrower country could borrow the currency of other countries;
- Serving as a lending institution of foreign currency and current transaction;
- Deciding the worth of a nation's currency and amending it, if necessary, in order to bring about a systematic amendment of exchange rates of member nations; and
- Supplying machinery for overseas consultations.