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Understanding International Monetary Fund.pptx
- 1. Understanding International Monetary Fund Explore thevital roles and functions of the IMF in promoting global economic stability and its influence on international finance. Deepthi Jagdish
- 2. Historical Development ofthe IMF July 1944 December 27, 1945 1946 onwards 2023 • Established during a UN conference • The IMF was established at the UN conference in Bretton Woods, New Hampshire, marking a pivotal moment in international economic cooperation. • Officially founded with 29 member countries • The IMF officially came into existence with 29 founding members, focusing on global economic stability. • Purpose to enhance economic cooperation • The IMF aimed to promote international financial cooperation and reduce poverty worldwide. • Expanded to 190 member countries • As of 2023, the IMF's membership has grown to 190 countries, with Andorra being the most recent member.
- 3. Global Monetary Cooperation •Promoting cooperation among nations for stable international monetary relations. Financial Stability • Eliminating risks of exchange rate fluctuations to ensure stability. Support for Employment • Supporting sustainable economic growth to promote job creation. Facilitation of International Trade • Facilitating balanced international trade to enhance global commerce. Poverty Eradication • Aiming to reduce poverty across the world as a fundamental objective. Objectives of the International Monetary Fund
- 4. Key Functions ofthe IMF • The IMF monitors the global monetary system and advises member nations for stability. SURVEILLANCE FUNCTION • The IMF gives precautionary guidance to avert potential financial crises. CRISIS PREVENTION ADVICE • IMF aids in developing robust monetary policies for member countries. MONETARY POLICY TRAINING • The IMF provides strategic advice to foster sustainable economic growth. POLICY RECOMMENDATIONS • The IMF trains central banks in effective financial management practices. CAPACITY DEVELOPMENT • The IMF helps nations establish sound legal frameworks for finance. LEGAL FRAMEWORKS GUIDANCE • The IMF offers support during financial crises to restore economic stability. FINANCIAL ASSISTANCE • Central banks receive support on improving public finance management. FOCUS ON PUBLIC FINANCE • The IMF enhances the capability of nations through better statistical practices. STATISTICAL ANALYSIS SUPPORT
- 5. Governance Structure ofthe IMF • The highest decision-making body, with one governor and an alternate from each member country. Board of Governors • Manages daily operations, consisting of 24 members elected by the Board of Governors. Executive Board • Advisory committees include the International Monetary and Financial Committee and the Development Committee. Ministerial Committees • Most powers are delegated to the Executive Board, which operates mainly by consensus. Delegation of Powers
- 6. Understanding Special Drawing Rights(SDR) Special Drawing Rights (SDR) were created in 1969 to enhance international liquidity and member reserves. SDR value is derived from a basket of currencies including the U.S. dollar, yen, euro, pound, and Renminbi. SDRs offer liquidity and serve as a claim on freely usable currencies for member countries. India holds an SDR quota of 5,821.5 million, ranking as the 13th largest quota holder globally.
- 7. Key Criticisms ofthe IMF's Approach Intrusive Loan Conditions • IMF loan conditions can undermine the economic sovereignty of nations, creating dependency. Lack of Local Context Understanding • Policies are often imposed without considering local economic and social contexts, resulting in ineffective outcomes. Aggressive Economic Reforms • Critics argue that IMF's reforms may be too aggressive and lack proper sequencing, causing instability. Inflationary Devaluations • IMF has faced criticism for facilitating inflationary devaluations in member countries, worsening economic conditions.
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