International Trade and Main Features of International Monetary Fund - Coursework Example

International Monetary Fund (IMF) The global financial systems of the world are analyzed by the International Monetary Fund (IMF), which is a world body taking care of the world’s financial centers and organizations spread across the globe. It observes the different exchange rates, balance of payments, transfer of debts towards poorer nations and so on and so forth. IMF offers a host of financial assistances where the technical expertise is just a part of the whole related package. IMF is situated in Washington DC, United States of America and works from the basis of headquarters. The IMF takes care of more than 185 nations under its fold and this is the reason it is accredited as a body which oversees the financial basis of the world’s top players so that an equality basis could be established between the rich and the poor, the elite and the impoverished and so on. Global monetary competition is one of the significant points as to why IMF has lingered on the bandwagon of advocating financial measures and regimes on a global level since this is something that will continue to shape the world in which we live in. (Little, 1999) It would provide security means in terms of global facilitation of international trade and logistics as well as assist in planning out the intricacies related with the networks of financial hubs and depositories. More than anything else, the role of the IMF has there in the wake of improving employment rates at the global front since it establishes different jobs and makes sure right people are appointed so that the jobs could bring out the very best from them, thus the end result is of prosperity and opulence in different regions of the world. Sustainable economic growth is thus the end result of all these measures that are taken on the part of the IMF regimes and what they in essence want is to reduce poverty in the poor nations of the world as well as to bring about an amendment in the different policies of the world which go against equality and the related rights. IMF knows that its role is predominant in such a situation and it has to understand the psyche of the financial centers before moving on any further. There are some exceptions when it comes to the working methodologies of IMF. Some member states like to work in an indirect manner however coming directly under the auspices of IMF itself. This creates problems for the oneness which must be there within any organization let alone a global monetary forum – responsible for bridging the gap between the rich and the poor, the wealthy and the left out. These member states include Cuba, North Korea, Andorra, Monaco, Tuvalu, Liechtenstein and Nauru. These nations are also United Nations member states and hence work under the organizational tenet of IMF itself but from an indirect perspective. A number of countries are represented by different member states in a 24-member Executive Board. However it is a point of consideration here that all the member countries come under the membership of IMF’s Board of Governors. In a changing capitalistic business environment which is spread all over the world, IMF has sustained itself on the principles of removing poverty right from the deep root levels. What this means is that the motto of IMF is to understand the psyche of the rich nations and to adopt policies which would make the poor and under-privileged member states to get back on their feet or to make them stand at a position from where they can reach ascendancy. (Halm, 1945) This will harness their hidden strengths and provide avenues of strength so that problems could be brought to a halt at the earliest. IMF finds out the mechanisms through which these problems could be detected and then tries to ascertain the exact basis under which problems do arise. What this gives IMF is a pathway to block the way for the troubles that come in the way of the member states and also present a destination where these countries have to reach at a certain point in time within the future. The aspect of removing poverty from the member nations’ economies is an interesting aspect since IMF has to take care of the profits and incentives of the rich nations as well whilst providing benefits to the already down trodden nations. This has to be a balancing act since the rich nations would not tolerate steps that would mean derailing their financial progress on a continuous basis. What IMF has to comprehend in such a situation is the fact that it indeed must balance between the two and not look to benefit any one party at a single instance. The membership qualifications of IMF ask for any state to ask for the same. This means that just about any nation in this world could apply for its membership and thus be a part of its policies and the manner in which the same are drafted. When a country asks for the membership to be given to it, it is first considered by IMF’s Executive Board. When the analysis process is finished, the Executive Board gives its recommendations to the IMF’s Board of Governors as well as gives them a recommendation which is basically in the form of a “membership resolution”. Now what this does is to spell out to the new member as to what her rights as well as duties are, in accordance with the charter and the principles on which IMF is founded and working upon. Also these recommendations provide the member nation as to how much her quota would be as concerns policy making and drafting within the lengths and breadths of IMF. Also the form of payment or subscription is decided upon as well. The customary terms and conditions are part of the whole deal that IMF undertakes with the new member nation coming under the fold of International Monetary Fund. Thus these recommendations provide a complete package deal to a nation that has just joined the bandwagon of IMF and is all set to eradicate poverty from the reigns of the poor nations and to create an air of equality within the different countries of the world, in fact on a global level. The legal steps have to be completed on the part of the member state which has been awarded the right to be a member of IMF. These legal steps are in light of its legislation and law that is practiced within the country. After the legalities have been taken care of, the IMF’s Articles of Agreement are duly signed and all the relevant obligations and details of IMF are fulfilled by the member state. IMF provides assistance and reforms in its different undertakings to the member states. This means that these reforms look at the grey areas and find the real problem with the areas that lack support – in terms of proper infrastructure, economic disparities, troubles, all from the short term perspective as well as in the long run frame of things. However for the greater part of these measures, financial assistance is something that reigns supreme over all helping regimes. (Krol, 2001) This means that financial assistance leads the pack when it comes to getting an understanding of the factors that bring about a global touch to the basis of IMF in the first place. What IMF in reality does is to pre-empt whether or not a member nation is going to plunge into financial problems at certain instances within the coming times as well as compares the same in light of the recent past that the country has gone through. This could mean a balancing act for its good times as well as bad, when it comes to getting the hang of its financial markets, areas and investment sector so to speak. Financial support holds a lot of weight for countries which are on the verge of bankruptcy and similar problems that seem to take the rounds of nearly all the countries from time to time. This even includes the wealthy nations where the problems might not be that enormous but then again trends of shortfall or recession would mean trouble for the financial markets that are present within that member nation or any country for that matter. Not only are the financial facilitations presented by IMF, but also there is a mechanism which gives invaluable suggestions in the light of the world’s financial markets, trends and past data and thus a country could benefit from the data that it receives from different member nations’ case studies of the preceding times. Moreover the structural adjustment programs facilitate the member nations as well as these programs highlight the potential trouble areas and also find out where work could be done in a full throttle manner. The opportunities are also pointed out as well as the drawbacks and weaknesses which exist within the different financial drivers running the very state as well. Now it is up to the member nation as to how much it wants to focus on these suggestions – all of which would benefit it enormously. The additional facilities that have been set up by the IMF have played a vital role at helping the problems of the nations which have high debts written next to their names. IMF has played its role at making these nations understand what is expected of them in the long run and how they could cope with the external pressures on a consistent basis. (Eichengreen, 1994) However what seems missing is the fact that IMF can do so much more yet cannot help the member nation from resolving its problems in the complete sense of the word. This state has to comprehend its own responsibilities and grant importance to the problems that have arisen with the passage of time and which for the most part, are a result of its own undertakings. Thus the debtor nations’ problems are circumvented by IMF time and time again but then again it is a two-way process and this requires stringent measures to be undertaken by the debtor nations themselves as well. What IMF can really do is to devise a plan for them so as to find out for their own betterment what the problems could mean for the respective economies, financial markets and centers, different investment options, etc. (Carvounis, 1986) After this becomes the duty of these debtor nations to comprehend that they have to stand up and be noticed within the relevant quarters since they directly come under the global fraternity when they ask for help and facilitation from IMF itself. All said and done, the role of IMF is immense in the global financial markets. It paves the way for building financial bridges between economies, not only amongst the member nations but also the countries that are not a part of IMF itself. (Tanzer, 1995) This is made possible by continuously monitoring the different economic activities which are undertaken by nearly all countries of the world. This offers a realistic yardstick of what actually is happening within the global front and what needs to be changed for the better in the times to come. International trade and logistics are given a boost by the different policies which are drafted by IMF and now it is the duty of IMF to understand that these policies have to be in line with the changing financial demands brought forward by the markets, economical settings and so on and so forth. The single most significant aspect that comes under the tenet of IMF is indeed the reduction or even elimination of poverty from the ranks of the poor nations. This is a sure step that has been taken in the right direction since it will form the basis of having equality and fairness when it comes to reserves amongst the different member nations – no matter they are rich, poor or in between. What is most pertinent is the realization of the fact that IMF is there to make sure that the disparities are removed at all times possible and the same do not arise in the newer markets where the economies are not yet stable and there is a lot of room for growth and opportunities exist in the related scheme of things nonetheless. In the end, it is important to state here that IMF has been accredited with a fair share of positives as well as negative points on a constant basis. The need is to analyze and weigh the two before one could make a fair decision on the basis of truth that exists in the notion which has been established in essence. Bibliography CARVOUNIS, Chris C. (1986). The Foreign Debt/National Development Conflict: External Adjustment and Internal Disorder in the Developing Nations. Quorum Books EICHENGREEN, Barry. (1994). International Monetary Arrangements for the 21st Century. Brookings Institution HALM, George N. (1945). International Monetary Cooperation. University of North Carolina Press KROL, Robert. (2001). The International Monetary Fund Deters Free Capital Flow. USA Today (Society for the Advancement of Education), Vol. 130 LITTLE, Jane. (1999). Rethinking the International Monetary System: An Overview. New England Economic Review TANZER, Michael. (1995). Globalizing the Economy: The Influence of the International Monetary Fund and the World Bank. Monthly Review, Vol. 47 Word Count: 2,119 Read More