The full form of IMF is the International Monetary Fund. It was established in 1945 as an international organisation to advance world poverty reduction, financial cooperation, economic security, and global development. The IMF is governed by a board of directors, each of whom represents a member country. It has over 190 participating nations, and its headquarters are in Washington, D.C.
The basic objective of the IMF is to create a stable global financial system, including stable international payments and exchange rates, so that nation may conduct business with one another. It achieves this in three separate ways:
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- Keeps track of the world markets and the economy of its members
- Extending credit to nations with negative payment balances
- Providing assistance in real life to representatives
- Lending to nations who experience issues with their trade balance
- Giving members helpful assistance
- The mandate was updated in 2012 to include all macroeconomic and financial issues that have an effect on sustainability worldwide.
Duties of the IMF
- It can stop exchange rate variations in order to maintain exchange stability.
- It enables member nations to reduce the balance of payments deficit by lending or selling foreign currencies to participants.
- It may encourage its members to modify the par value of its currencies if there are significant changes in the economies of its representatives.
- It provides member nations with economic and monetary guidance to aid in stabilising their economies.
- It may identify a currency as being rare and in high demand, and it may increase its supply by borrowing it from or buying it in exchange for gold from the nation in question
- It enables members to borrow in exchange for their own currencies from the IMF. By repaying loans in convertible currencies, borrowing nations are forced to buy back their currencies.
- It offers participating countries technical assistance. It provides its specialists & experts with resources or can send external experts to provide the Member States with technical support.