{"id":6584,"date":"2016-08-23T20:29:49","date_gmt":"2016-08-23T20:29:49","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/masterybusiness2xngcxmasterspring2016\/?post_type=chapter&#038;p=6584"},"modified":"2024-05-02T19:40:26","modified_gmt":"2024-05-02T19:40:26","slug":"the-international-monetary-fund-imf","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/chapter\/the-international-monetary-fund-imf\/","title":{"raw":"The International Monetary Fund (IMF)","rendered":"The International Monetary Fund (IMF)"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Describe the role of the IMF in promoting global trade<\/li>\r\n<\/ul>\r\n<\/div>\r\n<img class=\"alignright wp-image-10029\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/10231347\/UN-IMF-4c.jpg\" alt=\"Commemorative postage stamp with the International Monetary Fund logo\" width=\"398\" height=\"274\" \/>\r\n\r\nThe <strong>International Monetary Fund<\/strong> <strong>(IMF)<\/strong> is an international organization headquartered in Washington, D.C., comprised of 189 member countries. The IMF works to foster global growth and economic stability by providing policy, advice, and financing to its members. It also works with developing nations to help them reduce poverty and achieve macroeconomic stability. Formed in 1944 at the Bretton Woods Conference in New Hampshire, it came into formal existence in 1945 with twenty-nine member countries and the goal of reconstructing the international payment system. It now plays a central role in the management of balance-of-payments difficulties and international financial crises.\r\n\r\nIMF member countries contribute funds to a pool, from which they can borrow if they are experiencing balance-of-payments problems. The rationale for this arrangement is\u00a0that private international capital markets function imperfectly, and many countries have limited access to financial markets. Without access to IMF financing, many countries can\u00a0only correct large external payment imbalances through drastic measures that can have adverse effects on their own economies and the world's. The IMF provides alternate sources of financing to countries in need that would not otherwise be available to them.\r\n\r\nWhen the IMF was founded, its primary functions were to provide short-term capital to aid the\u00a0balance of payments\u00a0and to oversee fixed-exchange-rate arrangements between countries, thus helping national governments manage their exchange rates and prioritize economic growth. This assistance was meant to prevent the spread of international economic crises. The IMF was also formed\u00a0to help put\u00a0the pieces of the international economy back together after the Great Depression and World War II. In addition, it also sought\u00a0to provide capital investments for economic growth and infrastructure projects.\r\n\r\nThe IMF's role was fundamentally altered by floating exchange rates post-1971. At that point, the organization began examining the economic policies of its loan recipients to determine whether a shortage of capital was due to economic fluctuations or economic policy. The IMF also researched what types of government policy would ensure economic recovery. The current\u00a0challenge is to help countries\u00a0implement economic policies that reduce the frequency of crises among the emerging-market countries, especially the middle-income countries that are vulnerable to massive capital outflows. In order to meet this challenge, the IMF's activities\u00a0have expanded beyond the oversight of exchange rates to surveillance of the overall macroeconomic performance of its member countries. Today it plays an active role in shaping and managing economic policy around the world.\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Question<\/h3>\r\nhttps:\/\/assess.lumenlearning.com\/practice\/a5fd4368-ddfb-46a3-8700-71b5194100c5\r\n\r\n<\/div>\r\nThe following video gives a good\u00a0overview of the IMF and its role in promoting global trade.\r\n\r\n<iframe src=\"\/\/plugin.3playmedia.com\/show?mf=3704540&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=XYkUkTkN060&amp;video_target=tpm-plugin-ai65ca5p-XYkUkTkN060\" width=\"800px\" height=\"520px\" frameborder=\"0\" marginwidth=\"0px\" marginheight=\"0px\"><\/iframe>\r\n\r\nYou can <a href=\"https:\/\/course-building.s3-us-west-2.amazonaws.com\/Intro+to+Business\/Transcriptions\/AboutTheIMF_transcript.txt\" target=\"_blank\" rel=\"noopener\">view the transcript for \"About the IMF\" (opens in new window).<\/a>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Describe the role of the IMF in promoting global trade<\/li>\n<\/ul>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-10029\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/143\/2017\/02\/10231347\/UN-IMF-4c.jpg\" alt=\"Commemorative postage stamp with the International Monetary Fund logo\" width=\"398\" height=\"274\" \/><\/p>\n<p>The <strong>International Monetary Fund<\/strong> <strong>(IMF)<\/strong> is an international organization headquartered in Washington, D.C., comprised of 189 member countries. The IMF works to foster global growth and economic stability by providing policy, advice, and financing to its members. It also works with developing nations to help them reduce poverty and achieve macroeconomic stability. Formed in 1944 at the Bretton Woods Conference in New Hampshire, it came into formal existence in 1945 with twenty-nine member countries and the goal of reconstructing the international payment system. It now plays a central role in the management of balance-of-payments difficulties and international financial crises.<\/p>\n<p>IMF member countries contribute funds to a pool, from which they can borrow if they are experiencing balance-of-payments problems. The rationale for this arrangement is\u00a0that private international capital markets function imperfectly, and many countries have limited access to financial markets. Without access to IMF financing, many countries can\u00a0only correct large external payment imbalances through drastic measures that can have adverse effects on their own economies and the world&#8217;s. The IMF provides alternate sources of financing to countries in need that would not otherwise be available to them.<\/p>\n<p>When the IMF was founded, its primary functions were to provide short-term capital to aid the\u00a0balance of payments\u00a0and to oversee fixed-exchange-rate arrangements between countries, thus helping national governments manage their exchange rates and prioritize economic growth. This assistance was meant to prevent the spread of international economic crises. The IMF was also formed\u00a0to help put\u00a0the pieces of the international economy back together after the Great Depression and World War II. In addition, it also sought\u00a0to provide capital investments for economic growth and infrastructure projects.<\/p>\n<p>The IMF&#8217;s role was fundamentally altered by floating exchange rates post-1971. At that point, the organization began examining the economic policies of its loan recipients to determine whether a shortage of capital was due to economic fluctuations or economic policy. The IMF also researched what types of government policy would ensure economic recovery. The current\u00a0challenge is to help countries\u00a0implement economic policies that reduce the frequency of crises among the emerging-market countries, especially the middle-income countries that are vulnerable to massive capital outflows. In order to meet this challenge, the IMF&#8217;s activities\u00a0have expanded beyond the oversight of exchange rates to surveillance of the overall macroeconomic performance of its member countries. Today it plays an active role in shaping and managing economic policy around the world.<\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\n<p>\t<iframe id=\"assessment_practice_a5fd4368-ddfb-46a3-8700-71b5194100c5\" class=\"resizable\" src=\"https:\/\/assess.lumenlearning.com\/practice\/a5fd4368-ddfb-46a3-8700-71b5194100c5?iframe_resize_id=assessment_practice_id_a5fd4368-ddfb-46a3-8700-71b5194100c5\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:300px;\"><br \/>\n\t<\/iframe><\/p>\n<\/div>\n<p>The following video gives a good\u00a0overview of the IMF and its role in promoting global trade.<\/p>\n<p><iframe loading=\"lazy\" src=\"\/\/plugin.3playmedia.com\/show?mf=3704540&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=XYkUkTkN060&amp;video_target=tpm-plugin-ai65ca5p-XYkUkTkN060\" width=\"800px\" height=\"520px\" frameborder=\"0\" marginwidth=\"0px\" marginheight=\"0px\"><\/iframe><\/p>\n<p>You can <a href=\"https:\/\/course-building.s3-us-west-2.amazonaws.com\/Intro+to+Business\/Transcriptions\/AboutTheIMF_transcript.txt\" target=\"_blank\" rel=\"noopener\">view the transcript for &#8220;About the IMF&#8221; (opens in new window).<\/a><\/p>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-6584\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Revision and adaptation. <strong>Authored by<\/strong>: Linda Williams and Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-sa\/4.0\/\">CC BY-SA: Attribution-ShareAlike<\/a><\/em><\/li><li>Practice Question. <strong>Authored by<\/strong>: Nina Burokas. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>The International Monetary Fund from Boundless Business. <strong>Provided by<\/strong>: Boundless. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/courses.lumenlearning.com\/boundless-business\">https:\/\/courses.lumenlearning.com\/boundless-business<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-sa\/4.0\/\">CC BY-SA: Attribution-ShareAlike<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">All rights reserved content<\/div><ul class=\"citation-list\"><li>About the IMF. <strong>Provided by<\/strong>: The International Monetary Fund. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/youtu.be\/XYkUkTkN060?list=PL1DFB5C3C94B31BF7\">https:\/\/youtu.be\/XYkUkTkN060?list=PL1DFB5C3C94B31BF7<\/a>. <strong>License<\/strong>: <em>All Rights Reserved<\/em>. <strong>License Terms<\/strong>: Standard YouTube License<\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">Public domain content<\/div><ul class=\"citation-list\"><li>UN-IMF. <strong>Provided by<\/strong>: UN. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/commons.wikimedia.org\/wiki\/File:UN-IMF-4c.jpg\">https:\/\/commons.wikimedia.org\/wiki\/File:UN-IMF-4c.jpg<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/about\/pdm\">Public Domain: No Known Copyright<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":114,"menu_order":20,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Revision and 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Question\",\"author\":\"Nina Burokas\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"f09f85f7-1f8c-4d07-a3ca-daa5b37e2c82, 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