International monetary fund is a worldwide organization which its idea was first perceived at a

United Nation conference in 1944 with forty four countries in attendance and it was later formed
in 1945 with its headquarters based at Washington D.C. The main reason for its creation was to
standardizing global financial relationship and exchange rate in the world. Its main objective is
to monitor world economy and to reinforce member state economically hence reducing poverty
level in world.1
The organization was started by forty four counties at a United nation convention in 1945 and its
size had increased up to one hundred and eighty nine in 2005 this is due increase of number of
board of governors with each member state having one representative.2 In addition, the
organization also has executive board which initially had twelve directors and later increased to
twenty in 1964 these members are selected on merit of the world regions and economic strength
of the countries in the world economy with the most influential countries economically being
given largest number of representative. Due to this United State has the utmost voting power
followed by Japan, China, Britain, Germany, Italy and France.3 During past years the role of
executive board has intensified due to increase in number of member states.
The purposes of the organization are: first is to ensure steadiness of the global monetary system
which includes the international payment and exchange rates. Secondly it promotes global
monetary collaboration between member states. Third it helps in coming up with a multilateral
system of payment of businesses among the member states and also help in eradicating foreign
exchange limitations that hinder international trade. Forth the organisation helps in the
advancement and balanced development of worldwide trade hence promoting and maintaining
growth in employment and income. Lastly it helps in growth of global trade, thus encouraging
establishment employment, poverty eradication and economic advancement.4
The roles of organization in modern economy are: first it performs economic surveillances
whereby it creates reports on member states economic status and it recommends area with flaw.
The reason for this is to work on prevention of crisis by stressing on areas with economic
inequity. Secondly it provides financial loans to states whose economy is in crisis this is made
possible by the fact that the organization has three hundred billion United State dollars of
loanable money which comes from money deposited by member state after joining the
organization5. Third it set standards for the worldwide economy and observes the monetary
1 "International Monetary Fund (IMF)", Opil.Ouplaw.Com, last modified 2014, accessed June 11, 2016,
http://opil.ouplaw.com/view/10.1093/law:epil/9780199231690/law-9780199231690-e492.
2 "About The IMF: Overview: What We Do", Imf.Org, last modified 2016, accessed June 11, 2016,
http://www.imf.org/external/about/whatwedo.htm.
3 "International Monetary Fund (IMF)", Opil.Ouplaw.Com, last modified 2014, accessed June 11, 2016,
http://opil.ouplaw.com/view/10.1093/law:epil/9780199231690/law-9780199231690-e492.
4 "International Monetary Fund (IMF)", Opil.Ouplaw.Com, last modified 2014, accessed June 11, 2016,
http://opil.ouplaw.com/view/10.1093/law:epil/9780199231690/law-9780199231690-e492.

communication between states. Lastly it helps countries in coming up with maintainable

financial policies.
Special Drawing Right (SDR) is type monetary reserve money that was created by International
Monetary Fund which operates as an add-on to the current reserves of states members.6 It was
created due to anxieties about the limits of dollars and gold as the only means of settling
worldwide account. Each member is allocated a certain amount of SDRs by the IMF. An example
of SDRs is that it acts as a source of capital for the states in possession of the SDRs and states
can make use of them by trading them for usable currency at a set value which is determine by
SDR basket.7 Some of international agreement includes article Articles of Agreement contains
agreement about IMF and an example is articles XV which states that IMF may create
unrestricted liquidity through allocation of SDRs to its state member.

5 Folkerts-Landau, Mathieson J. Donald, and Schinasi J. Garry, International Capital Markets: Developments,
Prospects, and Key Policy Issues (Washington, DC: International Monetary Fund, 1997).
6 Pietro Alessandrini and Michele U. Fratianni, "International Monies, Special Drawing Rights, and Supernational
Money", SSRN Electronic Journal (n.d.).
7 Domenico Lombardi and Ngaire Woods, "The Politics of Influence: An Analysis of IMF Surveillance", RRIP 15,
no. 5 (2008): 711-739.