The Great Depression of the 1930s, and the subsequent actions, like currency devaluations and trade restrictions imposed by many countries so as to eliminate the impact on domestic income, led to lowering of world trade and increase in unemployment. This led to Bretton Woods Conference, attended by 44 countries, in July 1944.
The IMF came into being on December 27, 1945 as a result of this Conference. It is a “cooperative apolitical intergovernmental monetary and financial institution.” Presently there are 185 members of IMF (with the exception of Taiwan being expelled in 1980, North Korea and Cuba being left out in 1964 and a few small member states of the UN). Each member does not enjoy equal voting strength.
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The IMF draws its financial resources principally from the quota subscriptions of its member countries. It has at its disposal fully paid-in quotas now totalling SDR 145 billion (about USD 215 billion). Member country’s voting power is based upon the country’s quota in the capital.
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Objectives:
The basic objective of IMF has been to promote international monetary cooperation. The IMF Charter prescribes its six objectives:
1. To promote international monetary cooperation among members.
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2. To facilitate the balanced growth of international trade and to contribute to high levels of employment, real incentive, and productive capacity.
3. To promote exchange stability and orderly exchange arrangements while avoiding competitive currency devaluation.
4. To foster a multilateral system of payments and transfers while eliminating exchange restrictions.
5. To make financial resources available to members.
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6. To seek reduction of payment imbalances.
