Institutions facilitating International Trade

Dr.M.Saravanan
Associate Professor & Head
Department of Commerce (International Business)
Sree Narayana Guru College
K.G.Chavadi, Coimbatore – 641 105
Email.: shravan.murugan@gmail.com
Mobile.: + 91 99434 37749
The International Monetary Fund (IMF) is based in Washington, D.C.
The organization is currently composed of 189 member countries, each
of which has representation on the IMF's executive board in proportion
to its financial importance. Quotas are a key determinant of the voting
power in IMF decisions.
Who funds the International Monetary Fund?

IMF funds come from two major sources: quotas and loans. Quotas,
which are pooled funds of member nations, generate most IMF
funds. The size of a member's quota depends on its economic and
financial importance in the world. Nations with larger economic
importance have larger quotas.
What is the difference between the World Bank Group and the IMF?

The World Bank Group works with developing countries to reduce

poverty and increase shared prosperity, while the International
Monetary Fund serves to stabilize the international monetary system
and acts as a monitor of the world's currencies.
What is International Monetary Fund and its functions?

The International Monetary Fund aims to reducing global

poverty, encouraging international trade, and promoting
financial stability and economic growth. The IMF has three main
functions: overseeing economic development, lending, and
capacity development
International Monetary Fund (IMF), United Nations (UN)
specialized agency, founded at the Bretton Woods Conference in
1944 to secure international monetary cooperation, to stabilize 
currency exchange rates, and to expand international liquidity
(access to hard currencies).
 Operation

The IMF’s principal activities have included stabilizing

currency exchange rates, financing the short-term balance-
of-payments deficits of member countries, and providing
advice and technical assistance to borrowing countries.
Financing balance-of-payments deficits

Members with balance-of-payments deficits may borrow money in

foreign currencies, which they must repay with interest, by
purchasing with their own currencies the foreign currencies held by
the IMF.
Each member may immediately borrow up to 25 percent of its quota
in this way. The amounts available for purchase are denominated in 
Special Drawing Rights (SDRs), whose value is calculated daily as a
weighted average of four currencies: the U.S. dollar, the euro, the
Japanese yen, and the British pound sterling.
SDRs are an international reserve asset created by the IMF in 1969 to
supplement members’ existing reserve assets of foreign currencies
and gold. Countries use the SDRs that have been allocated to them
by the IMF to settle international debts.
Advising borrowing governments

The IMF consults annually with each member government. Through

these contacts, known as “Article IV Consultations,” the IMF
attempts to assess each country’s economic health and to forestall
future financial problems. The fund also operates the IMF Institute, a
department that provides training in macroeconomic analysis and
policy formulation for officials of member countries.