The IMF, Money, International Trade and Cooperation
(Activities: Cornerstones of the IMF and Trading Around the World)
Group #4:
Membership Benefits and Obligations

Newland is a new country and wants to join the IMF. As a class, you will need to figure out two things: what are the obligations of Newland's new membership and what are the bene-fits Newland will enjoy as a member of the international financial community? Divide the class into two groups – GROUP A and GROUP B. Group A is responsible for researching the obligations of membership and reporting their findings to the class. Group B is responsible for researching the benefits of membership and reporting their findings to the class.

GROUP A: Obligations of Membership (IMF gold medallion)
As representatives of Newland, what will your country have to do to be a member of the IMF? Members are required to share information (cooperate) on economic data (banking and government spending, taxes and exchange rate policies) with other countries.

The four main obligations are as follows:

1. Agree to the code of conduct in the IMF Articles of Agreement
   1. define "code of conduct"
      
   2. define the IMF Articles of Agreement – "An international treaty that sets out the purposes, principles, and financial structure of the IMF." The Articles, which were entered into force in December 1945, were drafted by representatives of 45 nations at a conference held in Bretton Woods, New Hampshire.
      
      
2. Pay a quota
   1. quota is like a membership subscription – "The amount that each member must pay to the IMF on joining."
      
      
3. Should allow the exchange of it's currency (money) for foreign currency
   1. Creates best conditions for good (efficient) international trade
      
      
4. Strive for openness in economic policies affecting other countries.
   1. Helping countries develop strong economies that can make the most of an "open" world economy (this means encouraging the free flow of imports and exports i.e. international trade.)
      
      

GROUP B: Benefits of Membership (IMF gold medallion)
There are currently 184 countries that have voluntarily joined the IMF (almost every country in the world). The benefits are five-fold:

1. access to information on economic policies for all member countries
   1. why beneficial? Because your economy is part of a global network of economies, knowing more about these economies helps you run your own economy better. Just as if you had a store in a shopping center, knowing about all other stores, about the rest of the shopping center, helps you to better run your own store.
      
      
2. opportunity to help to decide which are the best economic policies for everyone
   1. why important? All countries are represented in one forum, which is the Executive Board. These 24 representatives discuss everything openly, convince each other until they reach a consensus.
      
      
3. access to technical assistance in banking, fiscal affairs, (government spending, taxes and finance) and exchange rate policies.
   1. why important? The IMF offers training and guidance in the most up to date developments in the fields of banking, fiscal affairs and exchange rates.
      
      
4. financial support for countries with financial difficulties
   1. why important? Suppose you and your family form a club, and each contributes some money to it. One of the benefits of your club is that, should you lose your job, or your salary is suddenly reduced because your company is in bad shape, you can borrow from the pool of money, until you can stand on your feet again. Because this pool of money belongs to everyone, the loan would be given on condition that you do certain things to improve your ability to repay the money you borrowed (conditionality). The same money can then be borrowed by another member of the club who may need it. (the revolving character of Fund credit.)
      
      
5. increased opportunity for trade and investment – This is the result of the 4 previous points
   

WHOLE CLASS: Should Newland become a member of the IMF? Why or why not?

SO WHAT? Are any of you members of an organization, club, team? Why do you like being a member? Or why would you like to become a member?

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