What is the full form of IMF
IMF: International Monetary Fund
IMF stands for International Monetary Fund. It an international organization established in 1945 to promote global economic growth, monetary cooperation, financial stability, international trade, and to reduce poverty throughout the world.
IMF is headed by a board of governors, each of whom represents one of the member countries of the organization. It is headquartered in Washington, D.C., and has around 190 member countries. Each member country has its representatives in the IMF’s executive board in proportion to its financial importance so that the countries who have a strong influence on the global economy could have the most voting power.
The main objective of the IMF is to create a stable international monetary system; a stable system of exchange rates and international payments to enable countries to transact with each other. It achieves this in three ways:
- Keeps track of the global economies and the economies of member countries
- Lending to countries facing the balance of payments issues
- Providing practical help to members
It’s mandate was updated in 2012 in order to include all issues related to the macroeconomic and financial sector and that have an impact on global stability.
Functions of IMF:
Some of the major functions of IMF are as follows:
1) Exchange Stability: It may discourage fluctuations in the rate of exchange to maintain exchange stability.
2) BOP Disequilibrium: It helps member countries to minimize the disequilibrium of balance of payments by selling or lending foreign currencies to the members. It may advise its members to change the par value of its currencies if there are fundamental changes in the economies of its members.
3) Determination of Par Value: It enforces the system of determination of par value of the currencies of the member countries. As per the guidelines of the IMF, the member countries must declare the par value of their currencies in terms of gold and US dollars.
4) Stabilize Economies: It gives suggestions to member countries related to economic and monetary matters to help them stabilize their economies.
5) Balance the Demand and Supply of Currencies: It may declare a currency as scarce currency which is in great demand and can increase its supply by borrowing it from the country concerned or by purchasing it in exchange for gold.
6) Maintain Liquidity: It allows members to borrow from the IMF in exchange for their own currencies. The borrowing countries are required to repurchase their currencies by repaying loans in convertible currencies.
7) Technical Assistance: It provides technical assistance to the member countries. It provides the services of its specialists and experts or can send the outside experts to provide technical support to member countries.