Why do we need

Smoothing the bumps

foreign exch

Before people from different countries can buy or sell

anything to each other, they have to solve a basic problem.
Buyers have to be able to change their money from their
country's currency to the seller's national currency. This is
called "foreign exchange." Each currency, whether it's the
US dollar or the indian rupees, has a value in terms of other
currencies.
 This is the "exchange rate." Without a reliable
supply of foreign exchange in each country, and
without relatively stable exchange rates, world
trade would drop drastically. You wouldn't be
wearing tennis shoes made in Asia, or eating an
apple grown in New Zealand.

 The International Monetary Fund was founded

over 50 years ago to allow currency to be
exchanged freely and easily between member
countries. Today, the IMF works to help member
countries ensure that they always have enough
foreign exchange to continue to do business with
the rest of the world.

Bretton Woods system

 The Bretton Woods system of monetary management established

the rules for commercial and financial relations among the world's
industrial states. independent nation-states.

 Preparing to rebuild the international economic system as World

War II was still raging, 730 delegates from all 44 Allied nations
gathered at the Mount Washington Hotel in Bretton Woods, New
Hampshire, United States, for the United Nations Monetary and
Financial Conference. The delegates deliberated upon and signed
the Bretton Woods Agreements during the first three weeks of
July 1944.
 The chief features of the Bretton Woods system were an
obligation for each country to adopt a monetary policy
that maintained the exchange rate of its currency within
a fixed value—plus or minus one percent—in terms of
gold and the ability of the IMF to bridge temporary
imbalances of payments. In the face of increasing strain,
the system collapsed in 1971, following the United States
' suspension of convertibility from dollars to gold. This
created the unique situation whereby the United States
dollar became the "reserve currency" for the nation-
states which had signed the agreement.
 IMF at a Glance
The International Monetary Fund (IMF)
came into official existence on December
27, 1945, when 29 countries signed its
Articles of Agreement at a conference held
in Bretton Woods, New Hampshire, USA,
from July 1-22, 1944. The IMF began
financial operations on March 1, 1947.
 How the IMF Came About
The International Monetary Fund (IMF or Fund) and
the International Bank for Reconstruction and
Development (IBRD or World Bank) were both
established at the United Nations Monetary and
Financial Conference, held at Bretton Woods, New
Hampshire, on July 1-22, 1944. The two were
created to oversee stability in international
monetary affairs and to facilitate the expansion of
world trade.
 Membership in the World Bank requires
membership in the IMF, and they are
both specialized agencies of the United
Nations. The World Bank was given
domain over long-term financing for
nations in need, while the IMF's mission
was to monitor exchange rates, provide
short-term financing for balance of
payments adjustments, provide a forum
for discussion about international
monetary concerns, and give technical
assistance to member countries.
 Membership qualifications

Any country may apply for membership to the IMF. The application
will be considered first by the IMF's Executive Board. After its
consideration, the Executive Board will submit a report to the Board
of Governors of the IMF with recommendations in the form of a
"Membership Resolution." These recommendations cover the
amount of quota in the IMF, the form of payment of the subscription
, and other customary terms and conditions of membership. After
the Board of Governors has adopted the "Membership Resolution,"
the applicant state needs to take the legal steps required under its
own law to enable it to sign the IMF's Articles of Agreement and to
fulfil the obligations of IMF membership.
Membership in the World Bank requires
membership in the IMF, and they are both
specialized agencies of the United Nations.
The World Bank was given domain over
long-term financing for nations in need,
while the IMF's mission was to monitor
exchange rates, provide short-term
financing for balance of payments
adjustments, provide a forum for
discussion about international monetary
concerns, and give technical assistance to
member countries.
 PURPOSE OF IMF
 . The IMF purposes are outlined in Article I of the
IMF Articles of Agreement.
 They are the promotion of international monetary
cooperation.
 The expansion and balanced growth of international
trade.
 Exchange rate stability.
 The elimination of restrictions on the international
flow of capital.
 The orderly adjustment of balance of payment
(BOP) imbalances.
MEMBERS OF IMF
IMF HEADQUATER AT WASHINGTON,DC
 FUNCTIONS OF I
IMF describes itself as "an organiz
to foster global monetary cooperat
facilitate international trade, promo
sustainable economic growth, and

The primary mission of the IMF is

to countries that experience seriou
 SHARE OF IMF QUOTA

Other
European
29%
Union
31%

South
America
ASEAN+3 6%
13%
United States
Africa
17%
4%
 TECHNICAL ASSISTANCE
 IMF offers advices to the member countries regarding the
formulation and implementation of ‘economic
management’.
 The fund provided the training course on ‘financial
analysis and policy’,fiscal policy etc.It provides training on
‘balance of payments methodology’,public finance,central
banking services,organisationand administration of central
bank.
 It sends teams of experts to various developing countries
in order to provide training,conducting
surveys,formulation of monetary policy etc.
 IMF LENDING
 A core responsibility of the IMF is to provide loans to countries
experiencing balance of payments problems.
 The financial assistance enables countries to rebuild there
international reserves, continue paying for imports and restore
conditions for strong economic growth.
 Unlike development banks,the IMF doesn’t lend for specific
projects.
 An IMFloan is usually provided under an arrangement which
stipulates the specific policies and measures a country has
agreed to implement to resolve its balance of payments
problems.
 Once an arrangement is approved by the board ,the loan is
released in phased installments as the program is carried out.
 IMF AND INDIA
 Joint india-imf training program (ITP) is established in
pune.
 The ITP provides policy-oriented training in economics
and related operational fields to officials in india.
 Courses covers macroeconomics management and
policies,financial programming,monetory
policy,exchange rate policy and foreign exchange
operations.
 The cost of running the ITP program is shared by the
IMF,reserve bank of india,government of australia.
From,1970,India no longer appointed
its own executive director, as it lost
its place among the five countries
with the largest quota.It was
replased by japan.
IMF gives a lost of
recommentations ,when they visit
India,and the Indian government
flush them down the toilet.
 CRITICISM REGARDING
IMF
 The united states is the biggest shareholders
in the IMF,holding nearly 18% in shares,and
the IMF is generally considered a tool of the
U.S.treasury.
 IMF steps in and provide money,reform are
not forthcoming.forexample-despite a post-
crisis recovery in some asian
countries,fundamental strutural reform has
not taken place in any of of the asians
countries.
 IMF says, it makes loans in exachange for
policy reform,it has not been successful in
turning countries to the free
market.Instead,the fund has created loan
addicts, “more than 70 nations have
depended on imf aid for 20 or more
years,24 countries have received IMF
creidts for 30 or more years.
 One of the biggest critiques of the
IMF and world bank is that they
hardly ever co-ordinate their
activities
THANK YOU