Amity School of Business Module- 6 IMF and IBrd (World Bank) 1
Amity School of Business International Monetary Fund (IMF): an international financial institution that seeks to promote international monetary cooperation, facilitate expansion of international trade, promote exchange rate stability of member currencies, assist in eliminating foreign exchange restrictions, and help member nations to tide over difficult Balance of Payments (Bo. P) position. Objectives: 1. 2. 3. 4. 5. 6. To promote international monetary cooperation. To facilitate the expansion of international trade. To assist member nations to correct their Bo. P disequilibrium. To promote exchange rate stability among members. To assist in establishing a multilateral system of payments. 2 To solve the problem of International liquidity.
Amity School of Business International Monetary Fund (IMF) • Established on Dec. 27, 1945 and started functioning on March 1, 1947. • 186 member nations • Membership of IMF is pre-requisite for membership of World Bank. 3
Resources Amity School of Business Resources of IMF come from two sourcesi) Subscription from members ii) Borrowings Each member is assigned a quota which is based on a member country’s contribution in IMF. This contribution is in the form of SDR’s, Forex and country’s own currency. Quota defines a member’s voting power in IMF. 4
Functions Amity School of Business • IMF provides financial assistance to member nations. • IMF also provides technical assistance to member nations in following areasi) Designing and implementing fiscal and monetary policies. ii) Drafting and reviewing economic and financial legislations. iii)Institution and capacity building. 5
Amity School of Business International Bank for reconstruction & Development (IBRD) • IBRD was established in 1945. It is now called the World Bank. • It was an outcome of Bretton Woods conference. • Has 186 member nations. • Its Board of governors consists of one governor from each member 6
Amity School of Business IBRD Objectives 1. To assist in reconstruction and development of territories of members by facilitating the investment of capital for productive purposes. 2. To encourage the development of productive facilities in UDC’s. 7
Amity School of Business IBRD Objectives 3. To promote private foreign investment by means of guarantees of participation. 4. Finance for productive purposes out of its own capital funds raised by it and other resources. 5. To promote the long range balanced growth of international trade. 8
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