International financial institutions

15.4 INTERNATIONAL MONETARY FUND
The International Monetary Fund (IMF) came into official 
existence on December 27, 1945, when 29 countries signed its Articles 
of Agreement (its Charter) agreed at a conference held in Bretton 
Woods, New Hampshire, USA, from July 1-22, 1944. The IMF 
commenced financial operations on March 1, 1947. Its current 
membership is 182 countries. Its Total Quotas are SDR 212 billion 
(almost US$300 billion), following a 45 per cent quota increase 
effective from January 22,1999.
• 
Staff: approximately 2,700 from 110 countries.
• 
Accounting Unit: Special Drawing Right (SDR). As of 
August 23, 1999, SDR I equalled US $1.370280.
IMF is a cooperative institution that 182 countries have 
voluntarily joined because they see the advantage of consulting with 
one another on this forum to maintain a stable system of buying and 
selling their currencies so that payments in foreign currency can take 
place between countries smoothly and without delay. Its policies and 
activities are guided by its Charter known as the Articles of 
Agreement.
IMF lends money to members having trouble meeting financial 
obligations to other members, but only on the condition that they 

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undertake economic reforms to eliminate these difficulties for their 
own good and that of the entire membership. Contrary to widespread 
perception, the IMF has no effective authority over the domestic 
economic policies of its members. What authority the IMF does 
possess is confined to requiring the member to disclose information on 
its monetary and fiscal policies and to avoid, as far as possible, 
putting restrictions on exchange of domestic for foreign currency and 
on making payments to other members.
There are several major accomplishments to the credit of the 
International Monetary System. For example, it 
• 
sustained a rapidly increasing volume of trade and 
investment;
• 
displayed flexibility in adapting to changes in 
international commerce;
• 
proved to be efficient (even when there were decreasing 
percentages of reserves to trade);
• 
proved to be hardy (it survived a number of pre-1971 
crises, speculative and otherwise, and the down-and-up 
swings of several business cycles);
• 
allowed for a growing degree or international cooperation;
• 
established a capacity to accommodate reforms and 
improvements.
To an extent, the fund served as an international central bank 
to help countries during periods of temporary balance of payments 
difficulties by protecting their rates of exchange. Because of that, 

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countries did not need to resort to exchange controls and other 
barriers to restrict world trade.