Money
Matters: An IMF Exhibit -- The Importance of Global Cooperation
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Obligations and Benefits
of IMF Membership
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Why
Join...
The International Monetary Fund?
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On joining the IMF, each country pledges to cooperate with all other
member countries in resolving international monetary problems. Members
are required to share information on financial, fiscal, economic,
and exchange policies that have international ramifications. Members
must refrain from restricting the exchange of domestic money for
foreign money. They pledge themselves to pursue economic policies
that will encourage employment and international trade to the benefit
of the entire world economic community.
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Agree to the code of conduct found in the IMF Articles of Agreement
- Pay
a quota subscription
- Refrain
from restrictions on exchange of foreign currency
- Strive
for openness in economic policies affecting other countries.
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The
IMF rarely makes its decisions on the basis of formal voting, but
relies on the formation of consensus among its members.
The
chain of command runs clearly from governments of member countries
to the IMF and not vice versa.
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Board
of Governors
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The
Board of Governors and their alternates are ministers of finance
or heads of central bank from each member country. They meet formally
only once a year.
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Executive
Directors
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The
wishes of the Board of Governors are communicated to the Executive
Directors who meet in formal session at least three times a week.
There are 24 Executive Directors, eight representing individual
countries – China, France, Germany, Japan, Russia, Saudi Arabia,
the United Kingdom, and the United States – and 16 representing
groups of the remaining countries.
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IMF
Staff
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The
IMF has an international staff of about 2,600 economists, statisticians,
research scholars, experts in public finance and taxation and in
finance systems and banking, linguists, writers and editors, and
support personnel, most headquartered in Washington, DC. The IMF
is headed by a Managing Director who is also chairman of the Executive
Board, which appoints him.
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Benefits
of Membership
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The
benefits of belonging to the IMF are obviously convincing to the
184 countries that have voluntarily joined the organization. These
countries anticipate that membership will help them run their own
economies better. Because member countries are known to be following
the IMF code of conduct, membership encourages investment and trade,
leading to fuller employment. The IMF also provides technical assistance
and financial support when the member country needs it.
- Access
to information on economic policies of all member countries
- Opportunity
to influence members’ economic policies
- Access
to technical assistance in banking, fiscal affairs, and exchange
matters
- Financial
support in times of payment difficulties
- Increased
opportunity for trade and investment
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Largest
IMF Members by Quota, 1998
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How
Members Determine Exchange Values
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(in
millions of SDRs and percent of total quotas)
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(in
number of countries)
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joining the IMF, each member country contributes a certain sum
of money, called a quota subscription, which is based on the
country’s wealth and economic performance. Members’
voting power is related directly to the amount of money they
contribute to the institution through their quotas. |
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The
IMF allows each member country to choose its own method of determining
the exchange value of its money. The only requirements are that
the member no longer base the value of its currency on gold
(which has proved to be too inflexible) and inform other members
about precisely how it is determining the currency’s value. |
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