Before starting with the topic, Let us firstly know, ‘What is the International Monetary Fund?” International Monetary Fund or IMF is an international organization which is working with the motive of developing monetary cooperation, secure financial stability, promote high employment and many more… The main purpose of IMF is to ensure the stability of the International Monetary System across different countries. International Monetary Fund was established in the year 1944, by the ideas of Harry Dexter White and John Maynard Keynes. It came into existence in the year 1945 with a total of 29 countries only, but currently, it consists of 189 Countries.
Now, moving towards our main topic i.e., Functions of the International Monetary Fund.
- Loan of Foreign Currency
- we know, The IMF ensures the stability of the Monetary System across different countries, the IMF provides a loan to countries whose Monetary system is unstable. The IMF provides the sum of the amount in the same currency which is used in the country.
- Liquidity of Fund Resources
- International Monetary Fund (IMF) defines funding liquidity as “the ability of a solvent institution to make agreed-upon payments in a timely fashion”.
- Central Bank’s Bank
- is an organization that provides funds to different countries to stabilize their monetary system. The country has an unstable monetary system that takes a loan from the IMF to stabilize its economy. In such a situation, the IMF act as a Banker’s Bank.
- Currency InShort Supply
- Currency shortage occurs when a country lacks a sufficient supply of their currency to manage its international trade effectively. This situation occurs when a country has to pay out more amount for its imports than the amount of currency receives from its exports. IMF provides the amount deficit to the country in terms of the loan.