GROUP 3
SHAMEER KK
SHEEBA
RANJINI
NEETHU THOMAS
HARIS CY
LITHIN
INTRODUCTION
 On joining the IMF, each country pledges to cooperate
with all other member countries in resolving
internat...
Obligations of Membership
 Agree to the code of conduct found in the IMF Articles
of Agreement
 Pay a quota subscription...
Benefits of Membership
 Access to information on economic policies of all
member countries
 Opportunity to influence mem...
Quotas
 Each member country's quota broadly reflects the size
of its economy: the larger a country's economy in
terms of ...
 Quotas, together with the equal number of basic votes
each member has, determine countries' voting power.
 They also he...
 Countries pay 25 percent of their quota subscriptions
in SDRs or major currencies, such as U.S.
Dollars, Euros, Pounds s...
Quota reviews
 Quotas are normally reviewed every five years and can
be increased when deemed necessary by the Board of
G...
Recent reforms
 In recent years, the IMF began a number of reforms
related to rebalancing members' quotas to ensure they
...
How member countries’ quotas are determined
 When a country joins the IMF, it is assigned an initial
quota in the same ra...
 The current quota formula is a weighted average of
GDP (weight of 50 percent), openness (30
percent), economic variabili...
Functions of quota
 Subscriptions (quota share). A member's quota
subscription determines the maximum amount of
financial...
Special Drawing Rights
 The Special Drawing Right (SDR) is an international
reserve asset, created by the IMF in 1969 to
...
 As they can only be exchanged for euros, Japanese
yen, pounds sterling, or US dollars, SDRs may actually
represent a pot...
Value definition of SDR
 The value of the SDR is determined by the value of
several currencies important to the world’s t...
Interest rate
 Special drawing rights carry a weekly determined
interest rate, but no party pays interest if an IMF
membe...
Membership of imf
Membership of imf
Membership of imf
Membership of imf
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Membership of imf

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THIS SLIDE WILL HELP YOU TO KNOW HOW THE IMF IS SELECTING THE MEMBERS AND HOW IMF ALLOCATING QUOTA FOR DIFFERENT MEMBER COUNTRIES

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Membership of imf

  1. 1. GROUP 3 SHAMEER KK SHEEBA RANJINI NEETHU THOMAS HARIS CY LITHIN
  2. 2. INTRODUCTION  On joining the IMF, each country pledges to cooperate with all other member countries in resolving international monetary problems.  Members are required to share information on financial, fiscal, economic, and exchange policies that have international importance.  They pledge themselves to pursue economic policies that will encourage employment and international trade to the benefit of the entire world economic community.
  3. 3. Obligations of Membership  Agree to the code of conduct found in the IMF Articles of Agreement  Pay a quota subscription  Refrain from restrictions on exchange of foreign currency  Strive for openness in economic policies affecting other countries.
  4. 4. Benefits of Membership  Access to information on economic policies of all member countries  Opportunity to influence members’ economic policies  Access to technical assistance in banking, fiscal affairs, and exchange matters  Financial support in times of payment difficulties  Increased opportunity for trade and investment
  5. 5. Quotas  Each member country's quota broadly reflects the size of its economy: the larger a country's economy in terms of output and the larger and more variable its trade, the larger its quota tends to be.  For example, the world's biggest economy, the United States, has the largest quota in the IMF.
  6. 6.  Quotas, together with the equal number of basic votes each member has, determine countries' voting power.  They also help determine how much countries can borrow from the IMF and their share in allocations of special drawing rights or SDRs
  7. 7.  Countries pay 25 percent of their quota subscriptions in SDRs or major currencies, such as U.S. Dollars, Euros, Pounds sterling, or Japanese yen. They pay the remaining 75 percent in their own currencies.  The IMF's lending resources come mainly from the money that countries pay as these quota subscriptions when they become members.
  8. 8. Quota reviews  Quotas are normally reviewed every five years and can be increased when deemed necessary by the Board of Governors.  The 14th General Review of Quotas was completed two years ahead of the original schedule in December 2010, with a decision to double the IMF's quota resources to SDR 476.8 billion.
  9. 9. Recent reforms  In recent years, the IMF began a number of reforms related to rebalancing members' quotas to ensure they continue to broadly reflect countries' relative size in the world economy.  In 2011, the number of basic votes was nearly tripled, which helped to ensure poorer countries maintained a say in running the institution.
  10. 10. How member countries’ quotas are determined  When a country joins the IMF, it is assigned an initial quota in the same range as the quotas of existing members that are broadly comparable in economic size and characteristics.  The IMF uses a quota formula to guide the assessment of a member’s relative position.
  11. 11.  The current quota formula is a weighted average of GDP (weight of 50 percent), openness (30 percent), economic variability (15 percent), and international reserves (5 percent).  For this purpose, GDP is measured through a blend of GDP—based on market exchange rates (weight of 60 percent)—and on PPP exchange rates (40 percent).
  12. 12. Functions of quota  Subscriptions (quota share). A member's quota subscription determines the maximum amount of financial resources the member is obliged to provide to the IMF.  Voting power (voting share). The quota largely determines a member's voting power in IMF decisions. Each IMF member’s votes are comprised of basic votes plus one additional vote for each SDR 100,000 of quota  Access to financing. The amount of financing a member can obtain from the IMF (its access limit) is based on its quota
  13. 13. Special Drawing Rights  The Special Drawing Right (SDR) is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries.  Special drawing rights (SDRs) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF).  Not a currency, SDRs instead represent a claim to currency held by IMF member countries for which they may be exchanged.
  14. 14.  As they can only be exchanged for euros, Japanese yen, pounds sterling, or US dollars, SDRs may actually represent a potential claim on IMF member countries' nongold foreign exchange reserve assets, which are usually held in those currencies.  While they may appear to have a far more important part to play or, perhaps, an important future role, being the unit of account for the IMF has long been the main function of the SDR
  15. 15. Value definition of SDR  The value of the SDR is determined by the value of several currencies important to the world’s trading and financial systems.  Initially its value was fixed, so that 1 SDR = 1 US dollar, but this was abandoned in favour of a currency basket after the 1973 collapse of the Bretton Woods system of fixed exchange rates.
  16. 16. Interest rate  Special drawing rights carry a weekly determined interest rate, but no party pays interest if an IMF member country maintains the amount of SDRs allocated to it.  Based on "a weighted average of representative interest rates on short-term debt in the money markets of the SDR basket currencies"  Interest is paid by an IMF member country if it holds less SDRs than it was allocated, and interest is paid to a member country if it holds more SDRs than the amount it was allocated

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