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April 21 AM

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10:30 AM
Wednesday April 21, 2021

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Monetary Fund
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Russell Castillo • Available

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Maria Angela Casela • Available

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Julia Olive Ardiente • Available

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Roselle Caibigan • Available

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The International Monetary Fund

• (widely known as the IMF) is an international cooperative
institution whose main mission is to promote and assist in
international monetary stability.
• Its main goal is to oversee a system of stable, fixed exchange
rates among the currencies of member nations.
• In 2017, the IMF consists of 189 member countries
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The International Monetary Fund

• IMF works to:
a. achieve and enhance a stable world economy through the
promotion of open financial disclosure among member
nations
b. the provisions of loans during period of economic crises,
and;
c. technical assistance provided through educational and
promotional means
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History
• The events that ultimately led to the creation of the IMF had their
origins in the conclusion of World War I

• As part of the Treaty of Versailles, Britain and France demanded

large amounts of war reparation payments from Austria and
Germany. However, the Austrian and German were also depleted,
too.
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History
• When a country imports more than it exports, it runs a balance of
payment deficits.

• The Great British economist John Maynard Keynes (1883-1946),

participated in the peace conference following World War I and
foresaw the scenario.
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History
• In his book, “The Economic Consequences of the Peace”,
predicted the second world war as an inevitable consequence of
the severe penalties and lack of political and economic
cooperation following the conclusion of WWI
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The Creation of IMF & The World

Bank
• July 1944- establishment of IMF
• 44 nations & currently with 190 member countries
• Fund three critical missions:
a. promoting international monetary cooperation
b. supporting the expansion of trade and economic growth
c. discouraging policies that would harm prosperity.
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The Creation of IMF & The World

Bank
• to aid members needing foreign exchange to conduct
international trade and promote a system of fixed exchange rates
• Until World War I, most countries were on the gold standard
• Bretton Woods Agreement
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The Creation of IMF & The World

Bank
• “par” value for their currency based on this fixed exchange rate
• gold at a rate of $35 per ounce
• quota subscription
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The Creation of IMF & The World

Bank
• World Bank
• The Bretton Woods system could not have worked without the
IMF.
• The World Bank, despite its name, is not the world's central
bank.
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The End of Brettonwoods

• Lasted from 1946 until 1971

• The system worked very well
• “The Gold Standard”
• The United States ran a trade surplus, exporting more goods and
services than it imported
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The End of Brettonwoods

• The amount of U.S. dollars held domestically on net increased,
causing little strain on the international monetary system
• This scenario changed during the 1960s.
• The amount of dollars held overseas expanded greatly
• The supply of U.S. dollars outstanding expanded significantly
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The End of Brettonwoods

• The U.S. Gold supply was being depleted.

• There were more dollars outstanding than there was gold by the
end of the decade.
• In August 1971, the administration of President Richard M.
Nixon (1913–1994) acknowledged the situation.
• The Smithsonian agreement.
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The End of Brettonwoods

• Initial agreement called for expanded fluctuation of exchange

rates from 1 percent to 32.25 percent;
• Floating exchange rate system.
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The Role Of The IMF Evolves

• In 1978, the IMF formally amended its constitution to alter its

role in the world economy.
• Now plays several roles in its overall mission.
• These roles fall generally under three areas:
a. surveillance,
b. technical assistance, and;
c. financial assistance.
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The Role Of The IMF Evolves

• Surveillance function:
 the IMF serves as a watchdog over member nations'
economic policies.
• In 2007, the IMF dramatically revised its policies.
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The Role Of The IMF Evolves

Some important points from the Decision include:

• Focus on external stability.
• Definite guidelines are set out for countries about how they run
their exchange rate policies.
• Surveillance is deemed a collaborative process that “has a
multilateral, medium-term perspective.”
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Russell Castillo • Available

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Maria Angela Casela • Available

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Silver Jaoung Adana • Available

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Julia Olive Ardiente • Available

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Roselle Caibigan • Available

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Russell Castillo • Available

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Maria Angela Casela • Available

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Silver Jaoung Adana • Available

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Julia Olive Ardiente • Available

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Roselle Caibigan • Available

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• The IMF has been labeled a “bailout” source for poorly run
economies.

• Critics also denounce the IMF for forcing nations in need to adopt
its policy recommendations as a condition of assistance.

• The IMF is frequently charged with favoring bankers and elite

classes, and obstructing debt reduction for the world's poorest
countries
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“Street protesters have it exactly right, for example, when they argue
that the economic policies imposed on
developing nations by the International Monetary Fund and World
Bank have hammered the poor,”

-Eric Pooley
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“Using loans and the threat of default as levers, the IMF has pushed
more than 90 countries to accept its brand of free-market shock
therapy: lowering trade barriers, raising interest rates, devaluating
currencies, privatizing state-owned industries, eliminating subsidies
and cutting health, education, and welfare spending.”
According to Gina-Marie Cheeseman in “International Monetary
Fund's Financial Assistance Policies,”
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Carol Welch(coordinator of the U.S. efforts for the United Nations' Millennium Campaign)

“Criticizes the dominant role the U.S. plays in the global economy,” arguing
that U.S policy of imposing “SAPs [structural adjustment policies] on
developing countries,” and opening “their markets to competition from
U.S. economies” does not serve these countries well. Welch argues that
SAPs are “based on a narrow economic model that perpetuates poverty,
inequality, and environmental degradation.”
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• The IMF has responded to its critics by actively working with

both the public and private sectors.

• The organization continues to develop systems and procedures

designed to limit such crises from spreading to other countries and
enveloping entire geographical regions.

• The IMF therefore remains a major player on the global economic

stage
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• The fund continues to grow and expand in its new roles within a
world of floating exchange rates and rapid capital flows.

• The modern IMF wears several hats, including:

• overseer and communicator of national policies and legislation,
• consultant and educator on numerous fiscal and monetary issues
• intermediary and lender for nations whose currencies come under
pressure

• The 189 member nations continue to support the IMF

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11:30 AM
Wednesday April 21, 2021

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