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The role of the International Monetary Fund in international affairs

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  1. Introduction
  2. What is the IMF?
    1. The source of the IMF
    2. Purpose and functioning of the IMF
  3. Work of the organization
    1. The surveillance
    2. Technical assistance
    3. Lending
  4. Criticisms and future changes of this organization
    1. Critics
    2. Future evolution
  5. Conclusion

?The International Monetary Fund is established and shall operate in accordance with the provisions of this Agreement as originally adopted and subsequently amended?, asserts the first clause of the Articles of Agreement. Set up after the Second World War as a response to the world currency failure of the 1930s, the International Monetary Fund was designed to help countries meet their Bretton Woods obligations of fixed currency rates (Jim Roger, 2010).

After 1971, and the discarding of the Bretton Woods accords, the IMF found itself with little to do. Currencies were now free floating, so its bureaucracy reinvented itself as the savior of developing countries' monetary crises.

Naturally, its role has changed over time but it stayed in the same sort of ideal: the fund now concentrates its ability on helping countries from the Third World instead of European countries.
The IMF has been created in order to resolve and regulate international economy, so we shall initially explain the reason for the appearance of this organization. Subsequently, I will explain the purpose and the work done by the organization. To conclude, I will describe the limitations and problems countered by this organization and its future evolution

Since its creation in July 1944, the organization has never stopped to function in terms of the evolution of the global economy. The IMF has helped countries to develop themselves during each phase of the global evolution.

The Great Depression of the 1930s demonstrated the necessity to create a monetary organization to manage the trade between countries (Skymind, 2010). During the Great Depression, countries tried to reinforce their flagging economies by sharply raising barriers to foreign trade, and devaluating their currencies to be competitive with other countries. These attempts proved to be self-defeating. International trade declined quickly and substantially (Skymind, 2010).

This breakdown in international monetary cooperation led the IMF's founders to plan an institution charged with supervising the system of exchange rates and international payments that enables countries and their citizens to buy goods and services from each other. The new identity would ensure exchange rate stability and encourage its members to eliminate exchange restrictions that hindered trade (IMF, 2010).

The IMF was officially created in July 1944, when representatives of 45 countries meeting in the town of Bretton Woods, agreed on a framework for international economic cooperation, to be established after the Second World War (IMF, 2010).

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