International Monetary Fund - What is it? objectives, functions, and more

International Monetary Fund

An organization that centralizes the monetary system and promotes monetary stability at the international level.

What is the International Monetary Fund?

The International Monetary Fund (IMF) is a specialized cooperative organization that centralizes the monetary system and promotes monetary stability at the international level, in addition to financial cooperation among its member countries, contributing to sustainable development and poverty reduction globally.

This entity is not only limited to dealing with the situations of its member countries, but its operation also influences the entire international monetary system.

The IMF, whose headquarters are located in Washington DC, United States, was created in 1945 through an international treaty during the Bretton Woods conference, convened after World War II. It was formed with the intention of avoiding collapses in economic systems by streamlining the rules accepted by member countries, providing financial support according to their macroeconomic conditions, and promoting debates related to global monetary issues.

Objectives of the International Monetary Fund

Among the objectives of the IMF we can find the following:

• Promote the adoption of good economic policy practices in the countries to avoid financial crises in their systems.
• Promote economic cooperation among its member countries.
• Ensuring international monetary security
• Promote sustainability and economic growth to reduce poverty.
• Dynamize a stable currency exchange.
• Support the multilateral system of exchange of transactions between countries to benefit international trade.

Functions of the International Monetary Fund

The main functions of the IMF are the following:

• Regulatory function: restrict disbursements or current transactions within the context of its functions.
• Information and service provision functions: provide technical advice and training to the requesting States in the implementation of adequate monetary policies.
• Financial function: economically and temporarily finance the countries to overcome the problems of the payment system of their members.
• Consultative function: supervise the monetary system at the international level and the policies carried out by the member countries.

Countries that promote it

Membership in the IMF is voluntary and today 190 countries are part of it.

Only sovereign nations can be members. Companies, corporations, or other types of institutions, even public ones, cannot be. On the other hand, to belong to the IMF it is not required that the country be a member of the United Nations, despite the fact that it constitutes an agency of said organization.

In the IMF, a particular voting system is used through which the country that contributes the highest quota, has the most power of determination in voting on decisions.

The 5 member countries that contribute the largest quotas to the IMF are:

• The United States.
• Japan.
• Germany.
• France.
• The United Kingdom.

 

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