International Monetary Fund (IMF)
#GS-02 International Organisation, #GS-03 External Sector
For Prelims
International Monetary Fund
- The International Monetary Fund (IMF) is an intergovernmental organization which currently has a membership of 190 countries.
- The idea for the formation of IMF was conceptualised in 1944 during the Bretton Woods Conference.
- IMF became operationalised on 27th December 1945.
Mission of IMF:
- IMF was created to help countries going through a foreign currency shortage by giving them long term loans with low interest rates.
It also aims to stabilise the international financial market through;
- furthering international monetary cooperation,
- encouraging the expansion of trade and economic growth, and
- discouraging policies that would harm prosperity.
Special Drawing Rights
- Special Drawing Rights (SDR) is an international reserve asset created by the IMF.
- The SDR basket contains US dollar, Euro, Japanese Yen, and British Pound Sterling and Chinese Renminbi as standard currencies.
- The only two criteria for a currency to be included in SDR basket are the export criterion and the freely usable criterion.
- A currency can meet the export criterion if its issuer is a member of IMF or belong to a monetary union that includes IMF members and is also one of the top five exporters in the world.
- For a currency to be deemed “freely usable” by the IMF, it has should be widely used as a means of payments for international transactions and has to be widely traded in the principal exchange markets.
Source “Backing Sri Lanka, India sends financing assurances to IMF”
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