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IMF (International Monetary Fund), one of the twin institutions was set up after the meeting of monetary and financial delegations of the United Nations held in Bretton Woods (U.S.A) in 1944 and came into force on 1st March, 1947. It is a landmark in the history of international trade. India is a founder member of IMF. It helps nations solve the deficit of BOP without any devaluation of currency. In 2010, its membership was 187 counties. The main objectives of IMF are as under:

  1. Prevent existing exchange controls
  2. Solve the problems relating to BOP
  3. Settle the exchange rate of the currency of participating nations
  4. Accelerate the pace of international trade.

Functions of IMF


The main functions of IMF are as under:

  1. IMF provides loans for solving the disequilibrium of BOP, participation in international trade and economic development of a nation.
  2. It helps in the regulation of Exchange Rate.
  3. It provides financial assistance to solve the deficit of BOP.
  4. The most demanded currencies are declared scarce currencies and their supply is fixed by IMF among the needed countries. IMF can also expand the supply of ‘scarce’ currencies by purchasing against security or by borrowing as a loan.
  5. IMF emphasizes for the elimination of exchange restrictions.
  6. There is a scheme of IMF for providing Compensatory Financial Facility. It was set up in February 1993, to provide loans in order to meet the requirement for BOP.
  7. It provides facilities for international consultations.
  8. It provides loans to meet with current transactions and not capital transactions.
  9. It helps to settle the exchange rate of the currency of participating nations.

The World Bank


The World Bankis also known as the “International Bank for Reconstruction and Development”. The working of World Bank is easy to understand. The lending nations subscribe towards its capitals stock in proportion to their economic importance. The United State quota is about one-third of total quota. The Bank can utilize its capital in granting international loans to people or countries whose projects are approved by it to those nations which can get private loans at reasonable interest rates. On the other hand, World Bank can make out of its own capital. It is important to note that it can float bonds and use the proceeds to make loans. There are 187 member countries of World Wide Bank which get long-term loan from it. 

Main Objectives Of The World Bank


The main objectives of World Bank are discussed as under:

  1. Accelerating the international trade.
  2. Focusing on the social and economic development of developing and least developing nations.
  3. Improving the efficiency of man-power by concentrating on their health and education.
  4. Enhancing the development of private enterprises.
  5. Creating favourable environment for long-term investments.

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