International Monetary Fund — Definition Explained Simply | Examples & Role
International Monetary Fund (IMF) is an international financial organization that promotes the stability of the global monetary system, supports cooperation among countries in monetary policy, and provides loans to governments.
International Monetary Fund (IMF) is an international monetary and financial organization, established in 1944 and functioning as a specialized agency of the United Nations. The main goal of the IMF is to maintain the stability of the global monetary system and to promote international cooperation in finance and trade.
According to the IMF, the Fund contributes to the development of the world economy through surveillance of the monetary and fiscal policies of its member countries, monitoring of balance of payments stability, and providing financial assistance to states facing economic difficulties. The IMF helps to remove currency restrictions, stabilize exchange rates, and build trust in international trade.
Main tasks of the IMF
- Promoting international trade and monetary cooperation.
- Overseeing the stability of exchange rates and the global financial system.
- Providing credit resources to countries facing balance of payments problems.
- Eliminating currency restrictions and supporting a multilateral system of payments.
- Formulating recommendations on monetary and financial policy.
IMF financing
The Fund’s capital is formed through contributions from member countries (known as quotas), the size of which depends on the economic potential of the country and its role in world trade. These quotas determine not only a country’s financial contribution but also its voting power within the organization.
IMF and the world economy
Today the IMF unites almost all countries of the world and plays a key role in preventing global financial crises. Its activities directly affect currency stability, inflation, credit markets, and the development of international trade.