History Of International Monetary Fund

The economic crisis faced by the world today is nothing when compared to the Great

Depression of the 1930s which served as the base for establishment of the International Monetary Fund or IMF in short form. Many countries tried to save their deteriorating economies during this time by creating a barrier between them and foreign countries. However instead to getting positive results to save themselves, this resulted in further economic depression.

On July 1944, 45 representatives from different countries met for the UN Nations Monetary and Financial Conference. This conference resulted in the conception of IMF of International Monetary Fund. The delegates had agreed on creating an international institution meant for overseeing the monetary systems of every country, mainly the international balance of payments and the exchange rates. Following the macroeconomic policies of its members, the aim of the organization was to stabilize the financial system of the world and maintain the development of its member countries. The structure basis was to avoid recurrence of selfish policies that could lead to Great Depression. This agreement was called Bretton Woods agreement because its venue was Bretton Woods in US.

The IMF was formally organized on 27 December 1945. The articles of agreement were signed by the first 29 member countries. The IMF officially started its operation on 1 March 1947. Today, the constitutional purpose of the institution remains the same.

The par value system was one of the financial policies of IMF, it was known as Bretton Wood system. It continued until 1971 when the US President suspended the conversion of the dollar into gold. It was a good transition until the oil prices began to increase. IMF came to help and had set up its two oil facilities.

For helping the poor member countries, a Trust Fund was set up by the institution to provide a financing scheme. France was the first country to borrow money from IMF in 1948. The Enhanced Structural Adjustment Facility replaced the Structural Adjustment Facility in December 1987. However the institution observed difficulty for paying the poor member countries. For solving this problem, the institute collaborated with World Bank in 1990 for ensuring the poor member countries to manage their debt.

At present, there are 186 member countries. 1950s and 1960s were years of expansion of membership. The fall of Berlin Wall and Soviet Union caused IMF to truly become a global institution. The member countries of IMF have benefitted from its financial aid and policies.

The first Managing Director of IMF was Camille Gutt of Belgium. Today its Dominique Strauss Kahn of France serving for a period of five years. The headquarters of IMF is located in Washington D.C. in America.

by: Tauqeer Hassan

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