THE INTERNATIONAL MONETARY FUND

Today's economies are linked on a global level. For example, consumers in the United States purchase computers manufactured in Japan and receive service assistance from call centers based in India. Countries with less developed economies seek foreign investment in order to help boost their economic performance, but foreign investors can be put off by unstable economic conditions, such as high levels of inflation. Countries may borrow from commercial banks which are also global but then may have problems repaying or even servicing the loans if the economies do not improve significantly. Following World War II, a number of international institutions were created that were designed to foster international trade, international financing of that trade, and resolve international financial disputes. These include the General Agreement on Tariffs and Trade now the World Trade Organization which focuses on trade issues, and financial institutions such as the World Bank and International Monetary Fund. This research focuses on these financial institutions in general and their role in today's international economy, and on the role and criticism of the International Monetary Fund in particular.

The World Bank and International Monetary Fund (IMF) were both created at the Bretton Woods Conference in 1945. This was the same conference at which the current banking system was established and which put in place

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nancial policies, greater stabilization among currencies and economies would result and the Great Depression would not be repeated. The IMF offers advice to member countries, technical assistance to assist countries in developing economic policy, and programs that ostensibly seek to reduce poverty around the world ("The IMF," 2005). Increasingly, the IMF works with the World Bank to provide financial assistance to countries that find themselves in severe economic and financial crisis. The World Bank is sometimes referred to as the "lender of last resort," and it is the promise of intervention by the World Bank in case of collapse or default that leads some financial institutions to lend funds to high-risk countries. Argentina is perhaps the most famous of those countries that is currently struggling with both currency problems and high levels of debt; Brazil is another country which, despite strong economic activity, finds itself highly leveraged to foreign banks ("The New," 2004). When the World Bank and the IMF step in to provide financial assistance, they require that the country involved follow strict economic policies in order to stabilize the economy and provide the country with the means to repay its loans. These progra

Category: Economics - T