International Monetary Fund Harvard Case Solution & Analysis

Introduction

International Monetary Fund (IMF) is an international non-governmental organization, which was initiated in 1944 at Bretton Woods Conference but it was officially started in 1945 by the collaboration of 25 countries. Member countries were supposed to contribute funds to the pool through pre-defined quota system for every country. Countries can borrow money and other resources from the pool and can later return them with additional interest.

Objectives of IMF

The objective of IMF is to promote the international economic co-operation, employment, international trade and exchange rate stability by providing financial resources to the countries in order to meet the need of their balance of payments.

Functions of IMF

IMF is consistently working on developing the financial needs of member countries by developing financial stability, global monetary cooperation and sustainable economic growth. IMF provides different kinds of resources to the countries.

Purpose of IMF

•           It helps countries in making their monetary policies through providing them with required resources for consultation and establishment of monetary policy that will result in diminishing of international financial crisis.

•           It helps to liberalize the international trading through assisting countries by increasing their incomes with controlling the unemployment rate.

•           It is the most important purpose of IMF to stabilize the exchange rates among the countries. It was vital to stable the currencies that could hold their value especially after the global depression of 1930s.

•           It is the purpose of IMF to provide multilateral methods of payment that will eliminate foreign exchange restrictions; therefore, countries will be freely trading with each other without worrying about the impact of interest rates and currency depreciation.

•           One of the most important purposes of IMF is to provide safety to the countries in the situations like crisis in their balance of payments. It provides confidence to the countries that cannot balance the money they owe to the other countries. IMF members can have confidence to fix the imbalances of the countries without devaluing their currency.

•           It diminishes the effects of instability in countries’ balance of payments account and it helps to retain the financial relationship and global trading at a steady rate by excluding the risks of global recession.

Globalization

            It is the process of international integration arising from the exchange of products, ideas and other factors of culture. It helps to increase the reaching of an organization and also creates opportunities from different countries ............................

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