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The International Monetary Fund (IMF)
a specialized agency of the United Nations that seeks to help its 188 member nations achieve economic growth, high employment, and improved standards of living, and whose members cooperate to stabilize exchange rates among their currencies and to maintain exchange arrangements
The IMF supports its members by providing policy advice to governments and central banks based on analysis of economic trends and cross-country experiences; research, statistics, forecasts, and analysis based on tracking of global, regional, and individual economies and markets; loans to help countries overcome economic difficulties; and technical assistance and training to help countries improve the management of their economies.
The IMF was conceived in July 1944, when representatives of 45 countries meeting in the town of Bretton Woods, New Hampshire, agreed on a framework for international economic cooperation, to be established after the Second World War. It came into formal existence in December 1945, when 29 countries signed its Articles of Agreement, and began operations on March 1, 1947. Later that year, France became the first country to borrow from the IMF.
The countries that joined the IMF between 1945 and 1971 agreed to keep their exchange rates (the value of their currencies in terms of the U.S. dollar and, in the case of the United States, the value of the dollar in terms of gold) pegged at rates that could be adjusted only to correct a "fundamental disequilibrium" in the balance of payments, and only with the IMF's agreement. This par value system -- also known as the Bretton Woods system -- prevailed until 1971, when the U.S. government suspended the convertibility of the dollar into gold. Since then, IMF members have been free to choose any form of exchange arrangement they wish (except pegging their currency to gold) -- allowing the currency to float freely, pegging it to another currency or a basket of currencies, adopting the currency of another country, participating in a currency bloc, or forming part of a monetary union.
For more information on how the IMF works, see its official website, www.imf.org.
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This page was last updated on June 22, 2018.