IMF Group2
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Transcript of IMF Group2
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THEINTERNATIONAL MONETARY FUND
By:Krishna ChaitanyaRoll No. 123
Jyotsna ShenoyRoll No.142
Vishi ShrivastavRoll No. 144
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W orld W ar Great Depression
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Formation
The IMF was conceived in July 1944, whenrepresentatives of 45 countries meeting in the town
of Bretton Woods, New Hampshire.The IMF came into formal existence in December 1945, when its first 29 member countries signed itsArticles of Agreement.
Began to expand in the late 1950s and during the1960s as many African countries becameindependent and applied for membership.
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Organization and purpose
The IMF describes itself as an organization of 187countries (as of July 2010)
Working to foster global monetary cooperationSecure financial stabilityFacilitate International TradePromote high employment and sustainableeconomic growthReduce poverty.
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Membership
Membership ResolutionQuota: A member's quota delineates basic aspects
of its financial and organizational relationship withthe IMF includingI. Voting power II. Access to financing
III. SDR allocations
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Governance structure
Board of GovernorsHighest decision-makingbody of the IMF.
Ministerial CommitteeInternational Monetaryand Financial Committee.Development Committee
The Executive Board24 board membersrepresent all 187countries
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Country Representation.
Represents theinterests of its 187member countries.Reforms were broughtrecently in IMF.Quotas and votingshares wereincreased for developing nationsand low Incomecountries.
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Q uotas.
IMF's resources come mainly from the money thatcountries pay as their capital subscription whenthey become members.Quotas broadly reflect the size of each member'seconomy.Determine how much countries can borrow fromthe IMF and their share in allocations of SDR s.
y Quota increased for emerging economies recently.Quota Subscriptions
25% and 75%.
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Special Drawing Rights.
SDR was created byIMF in 1969. Currentlythe amount of SDRsstands at 204.1bn.Its value is based on4 key currencies.SDR play a key roleas an interest bearinginternational reserveasset.
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Surveillance
Monitoring exchange rate, monetary, and fiscalpolicies
Advice on issues such as the choice of exchangerate policies.Assessment of risks and vulnerabilitiesstemming from large and sometimes volatile capitalflows.
The IMF and the World Bank play a central role indeveloping, implementing, and assessinginternationally recognized standards and codes.
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Lending to countries
Country with largeunplayable bills, poses a
risk to the internationalfinancial system.IMF lends money tocountries with financialcrisis. Eg: Ireland, Greece.Loans are given ininstallments with eachinstallment conditional ontargets being met.
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IMF and International Business
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Lending to countries at the time of need
PROS CONSPrevented default Stringent austerity
measures
Saved the eurozone People revolted
PROS CONSBailout package Drastic austerity conditions
Restored confidence in thecurrencies
critics opinion reverse of Keynesian response
Asian financial crisis 1997
Euro crisis 2010
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Promoting emerging economies
BRIC nations in top 10 memberso China greater voting power in the IMF
o shift of more than 6% of quota shares todynamic emerging market
o Boost to IMFs resources by about $733.9billion at current exchange rates
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Shortcomings of the IMF
Austerity measureso Argentina followed IMF policies, yet faced
crisis in 2001
Reform measureso Kenya followed the IMF SAP process and
lost billions due to siphoning
Supporting dictatorshipso Brazil and Argentinao Eg. Castello Branco in 1960s
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Conclusion
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Thanks!!!