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Imf International Monetary And Financial Committee

5134 words - 21 pages

IntroductionAlthough, capitalism has only been around for approximately 100 years as an idea, its propagation around the globe has been relatively successful. However, the propagation has had its failures. For instance, the gold standard as a monetary system for world trade had its weaknesses. The gold standard first began to have problems during World War I (1914-1919) when countries tried to expand the money supply without the additional gold that they would need. When the IMF was established in 1944 by a United Nations conference held at Bretton Woods, New Hampshire, the Allied Powers of World War II also established a U.S. dollar-based international monetary system. Under the agreement ...view middle of the document...

Apart from those Governors that are represented on the International Monetary and Financial Committee, the Governors gather only on the occasion of the IMF-World Bank Annual Meetings to deal formally with IMF matters. During the rest of the year, they communicate the wishes of their governments for the IMF's day-to-day work through their representatives on the Executive Board.The International Monetary and Financial Committee consist of 24 Governors representing constituencies or groups of countries, corresponding to those of the Executive Board. It meets twice a year, on the occasion of the IMF-World Bank Annual and Spring Meetings, to advise the IMF on the functioning of the international monetary system.The Executive Board consists of 24 Executive Directors representing the IMF's 184 member countries. The Board, which is based at IMF headquarters in Washington, D.C., is responsible for conducting the day-to-day business of the IMF and meets at least three times a week in formal session. At present, eight Executive Directors represent individual countries: China, France, Germany, Japan, Russia, Saudi Arabia, the United Kingdom, and the United States. The 16 other Executive Directors each represent groupings of the remaining countries. The Executive Board rarely makes its decisions on the basis of formal voting, but relies instead on the formation of consensus among its members. Finally, the Managing Director is Head of IMF staff and Chairman of the Executive Board. Executive Board appoints the Director. The current managing director is Horst Kohler, a German national. (imf.org)The IMF's three main activities:surveillance, financial assistance, and technical assistance.Surveillance is a policy dialogue with each of its members. Generally once a year, it evaluates members' exchange rate policies within the overall framework of their economic policies in what is known as an Article IV consultation. Surveillance is based on the conviction that strong and consistent domestic economic policies will lead to stable exchange rates and a growing and prosperous world economy. The IMF also carries out multilateral surveillance, the results of which are summarized in the World Economic Outlook annually, and in the Global Financial Stability Report quarterly. The importance of surveillance over members' economic and financial policies was further underscored by the Mexican crisis of late 1994 and the financial crises in Asia and other emerging market countries, when crises in these countries spilled over to other emerging economies. The IMF also has a mandate under its Articles of Agreement to exercise firm surveillance over the exchange rate policies of members in order to oversee the international monetary system and ensure its effective operation. Surveillance mandate initiates the IMF to hold consultations, normally every year, with each of its members. These consultations focus on the member's exchange rate, fiscal, and monetary policies; its balance...

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