Full Form of IMF is International Monetary Fund.
IMF is an international organization it was introduced in the year 1945 to promote the global economic growth, monetary cooperation, financial stability, international trade, and to reduce poverty throughout the world.
IMF achieves its objective in this ways:
1.Keeps track of global economic and the economies of member countries.
2.Lending to the countries facing the balance of payments issues
Providing practical help to the members.
The functions of IMF are as follows:
1.Exchange Stability: IMF may discourage the 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: IMF give suggestions to member countries related to economic and monetary matters to help them stabilize their economies.
5. Balance the Demand and Supply of Currencies: IMF may declare the 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: IMF also 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.
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