Thesis: International Monetary Fund IMF

Pages: 3 (1216 words)  ·  Style: APA  ·  Bibliography Sources: 7  ·  Level: College Senior  ·  Topic: Economics  ·  Buy This Paper


The creation and criticism of the International Monetary Fund: From Bretton Woods onward

The International Monetary Fund (IMF) is an organization founded upon noble intentions, despite the many controversies it has spawned since its conception. The origins of the IMF lie in the desire of the Allied powers to prevent the worldwide economic crisis of the 1930s from reoccurring. The United States, the United Kingdom, and 45 other nations attempted to create an economic institution to facilitate greater international economic and financial cooperation to serve the interests of the world (IMF -- Creation, 2009, Encyclopedia of the Nations). During the Great Depression, protectionism had become rife. Rather than acting as a bolster to the health of fragile economies, limiting free trade had proved self-defeating (Cooperation and reconstruction (Cooperation and reconstruction: 1944 -- 71, 2009, IMF). Stabilizing world exchange rates and encouraging free trade was the cornerstone of the IMF philosophy.

The organization formally came into being in July 1944, when representatives from the eventual member nations met in the town of Bretton Woods, New Hampshire. The signature countries of what became the Bretton Woods Agreement agreed to keep their exchange rates pegged to the U.S. dollar. The U.S. In turn agreed to keep its rates valued in terms of the price of gold. Rates could be adjusted "only to correct a fundamental disequilibrium in the balance of payments, and only with the IMF's agreement" (Cooperation and reconstruction (Cooperation and reconstruction: 1944 -- 71, 2009, IMF). The IMF's Bretton Woods system existed until 1971, after the U.S. declared the "temporary" suspension of the gold standard, which resulted in the currently fluid exchange rate, "where nations could choose to let their currencies float, pegging it to another currency or a basket of currencies, adopting the currency of another country, participating in a currency bloc, or forming part of a monetary union" (the end of the Bretton Woods System: 1971-1981, 2009, IMF). But the role of the IMF to ensure financial world stability did not end with the death of Bretton Woods and the gold standard. During mid-1970s, the IMF also extended more aid -- and more supervision of poor nations, "by providing concessional financing through what was known as the Trust Fund" and similar supportive organizations and funds soon followed (the end of the Bretton Woods System: 1971-1981, 2009, IMF). While the IMF was focused upon short-term loans, the World Bank, also founded in 1944, was more focused upon long-term loans. Both served critical functions in the world economy.

Yet when the IMF extended its funding it also exercised greater oversight and, some would say, micromanagement of economies receiving IMF funds. Criticism of the IMF grew especially vociferous in the wake of the Asian economic crisis of 1998-1999. The crisis began in Japan but the hardest-hit nations were undeniably the emerging economic powers in the region, such as Thailand. Their fragile and tenuous attempts to establish an economic foothold were severely impacted by the spiraling regional crisis. The IMF mandated that the recipient governments institute deflationary fiscal policy in the form of spending cuts, raise taxes, and charge higher interest rates of lenders. "It is argued the IMF turned a minor financial crisis into a major economic recession with unemployment rates in countries like Thailand, Indonesia and Malaysia shooting up," and in an unusual move, the World Bank, the IMF's sister institution, articulated the dangers of IMF Asian policy (Bluestein 1998). The IMF was admittedly unprepared for the Asian crisis, and the crisis that subsequently occurred in the emerging Slavic nations: these were private international capital account crises although the IMF founders had erroneously assumed "that private capital flows… [END OF PREVIEW]

International Monetary Fund (IMF) Research Paper

Benefits and Challenges of the International Monetary System Research Paper

International Visit General Electric's Corporate Website: Essay

International Development Studies Economic Development and Culture Change Term Paper

Criticize International Monetary Fund Essay

View 325 other related papers  >>

Cite This Thesis:

APA Format

International Monetary Fund IMF.  (2009, September 11).  Retrieved November 14, 2019, from

MLA Format

"International Monetary Fund IMF."  11 September 2009.  Web.  14 November 2019. <>.

Chicago Format

"International Monetary Fund IMF."  September 11, 2009.  Accessed November 14, 2019.