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DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY, VISAKHAPATNAM, A.P.

INTERNATIONAL MONETARY FUND

Submitted To

Prof. Aruna Kammila

Submitted By

Kartik Bhargava,
2018-044,

Vth Semester
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ACKNOWLEDGEMENT

I have taken efforts in this project. However, it would not have been possible without the kind
support and help of many individuals and organizations. I would like to extend my sincere thanks
to all of them.

I would like to express my gratitude towards my parents & member of DSNLU for their kind co-
operation and encouragement which helped me in completion of this project.

I am highly indebted to Prof. Aruna Kammila for her guidance and constant supervision as well
as for providing necessary information regarding the project & also for her constant motivation
and support in completing the project.
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ABSTRACT

"The IMF, also known as the Fund, was conceived at a UN conference in Bretton Woods, New
Hampshire, United States, in July 1944. The 44 countries at that conference sought to build a
framework for economic cooperation to avoid a repetition of the competitive devaluations that
had contributed to the Great Depression of the 1930s.

The IMF's responsibilities: The IMF's primary purpose is to ensure the stability of the
international monetary system—the system of exchange rates and international payments that
enables countries (and their citizens) to transact with each other. The Fund's mandate was
updated in 2012 to include all macroeconomic and financial sector issues that bear on global
stability.

The IMF has played a part in shaping the global economy since the end of World War II. As the
Second World War ends, the job of rebuilding national economies begins. The IMF is charged
with overseeing the international monetary system to ensure exchange rate stability and
encouraging members to eliminate exchange restrictions that hinder trade. After the system of
fixed exchange rates collapses in 1971, countries are free to choose their exchange arrangement.
Oil shocks occur in 1973–74 and 1979, and the IMF steps in to help countries deal with the
consequences. The implications of the continued rise of capital flows for economic policy and
the stability of the international financial system are still not entirely clear. The current credit
crisis and the food and oil price shock are clear signs that new challenges for the IMF are waiting
just around the corner. The researcher will be focusing on various other aspects as in the future
scope, criticisms and various suggestions to the existing IMF."
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SYNOPSIS

PROJECT TITLE- INTERNATIONAL MONETARY FUND

RESEARCHER- KARTIK BHARGAVA

OBJECT/AIM-The object behind this research work and the project is to understand the
working of the International Monetary Fund and to find out as to how the whole process works
behind the veil of the Funding and helping in various transactions."

BACKGROUND-The International Monetary Fund (IMF) is an international organization

headquartered in Washington, D.C., of "189 countries working to foster global monetary
cooperation, secure financial stability, facilitate international trade, promote high employment
and sustainable economic growth, and reduce poverty around the world." Formed in 1945 at
the Bretton Woods Conference primarily by the ideas of Harry Dexter White and John Maynard
Keynes it came into formal existence in 1945 with 29 member countries and the goal of
reconstructing the international payment system. It now plays a central role in the management
of balance of payments difficulties and international financial crises. Countries contribute funds
to a pool through a quota system from which countries experiencing balance of
payments problems can borrow money. As of 2016, the fund had SDR477 billion (about
$668 billion)"

SCOPE-The scope of the project is the whole of the countries which are a part of the United
Nations and the International Monetary Fund. It also revolves around various other funding
organizations.

RESEARCH METHODOLOGY- The researcher will strictly follow doctrinal method of

research by also having internal and external approach towards the gravity of the issues.

RESEARCH QUESTION - I} Whether the IMF is at its optimized working capacity?

II} Whether IMF has to adhere to the ground norms and the International along with the National
policies of the member countries?

III} Whether IMF is hot and cold in currency policies?

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HYPOTHESIS-The researcher would get into the understanding of the project by having a
presumption that the IMF is stabilized and regulated and help as a crisis manager during the odd
times of the economy. The proof or disproof of it will be found out in the later part of the project.

LITERATURE REVIEW

I} International Monetary Fund and International Bank for Reconstruction and

Development- Bretton Woods, N. H

"The representatives of the forty-four nations faced differences of opinion frankly and reached an
agreement which is rooted in genuine understanding. None of the nations represented here has
had altogether its own way. The author says we have had to yield to one another not in respect to
principles or essentials but in respect to methods and procedural details,-. The fact that we have
done it and that we have done it in a spirit of good-will and mutual trust, is, what he believes,
one of the hopeful heartening portents of our time. This book is a sign blazoned upon the
horizon, written large upon the threshold of the future—a sign for men in battle, for men at work
in mines, and mills,' and in the fields, and a sign for women whose hearts have been burdened
and anxious lest the cancer of war assail yet another generation—a sign that the peoples of the
earth are learning how to join hands and work in unity. There is a curious notion that the
protection of national interest and the development of international cooperation are conflicting
philosophies—that somehow or other men of different nations cannot work together without
sacrificing the interests of their particular nation."

II] CAPITAL FLOWS: IMF GUIDELINES CRITICIZED

"This Bretton Woods Project article highlights the IMF’s continued struggle with the idea of
capital controls as acceptable policy instruments. Whether or not the struggle is more ideological
than prudential is of little interest to countries that are experiencing large inflows of capital from
investors seeking higher returns than they can get in “developed countries.” Their warranted fear
is that the capital will be retrieved by investors as interest rates once again rise in Europe and the
US. Countries that used controls during the financial crisis have better weathered the storm than
those that did not - a statistic that suggests the IMF should reconsider more vocally. The current
surge of capital flows to emerging markets continues to challenge the IMF’s historical position
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regarding capital account regulation and exchange rate policies, with the Fund’s policy
framework being criticized by academics and emerging markets"

III] AGREEMENT ON A GLOBAL FIREWALL, BUT LITTLE BEYOND THAT. - ANNIE LOWERY

" At the most recent summit of finance ministers, central bankers and international financial
institutions (World Bank and IMF) in Washington D.C., the view that countries are divided
about what to do to revert the crisis was consolidated. Despite pledges to rack up the IMF’s
lending capacity, the contributors are all but in agreement about what should be done with it.
Whilst European finance ministers stubbornly praise austerity yet lobby for greater pools of
money, the IMF and the World Bank have made clear that “fiscal consolidation” alone will be
deleterious. Additionally, several emerging economies argue that fairer representation at the IMF
is long overdue, particularly considering the relative sizes of their economies and their generous
contributions to the bailout fund."

IV] THE REFORM OF IMF: THE PROVISIONAL APPRAISAL AND PERSPECTIVE OF

INTERNATIONAL DEBATES - BY RAINER WALK.

"This book primarily talks about the regionalization issue and how is it to have a regionalized
body that would work for the regional institution for flow of capital in the country balancing the
influx of the capital.

CHAPTERS

1] INTRODUCTION

2] WHAT IS IMF?

3] HOW DOES IT WORK?

4] WHAT IS ITS OBJECTIVE AND WHO ARE ITS MEMBERS?

5] WHAT ARE THE LACUNAS IN ITS WORKING?

6] CRITICISM TO SYSTEM

7] GLOBAL GOVERNANCE AND FUTURE OF IMF

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8] SUGGESTIONS

9] SUMMARY

10] CONCLUSION

BIBLIOGRAPHY

 FOR A STRONG AND DEMOCRATIC UNITED NATIONS: A SOUTH PERSPECTIVE.

 GLOBAL FINANCIAL REFORM: HOW? WHY? WHEN?
 STRUCTURAL ADJUSTMENT OF THE IMF : OPTIONS FOR REFORMING THE IMF'S
GOVERNANCE STRUCTURE

It is for the kind information of the readers, that the project might have a turn and may add few
more topics to the already existing ones with the advancement of the project.