With the financial markets as volatile as they are today, we tend to highlight things we may not have noticed before and question the governing institutions that have direct and clear influence over the economy. One such financial market institution is the IMF otherwise known as the International Monetary Fund and sometimes known simply as “The Fund”. Although there have been a few red flags of late leading to increased scrutiny of the IMF, most still don’t know what the institution does, how it works, or where it came from. Let’s look at some of the aspects of the IMF as we try to understand how they influence financial services and markets today.
The Founding of the IMF
In July 1944, the United Nations conceived an idea to create an institution that would stabilize the world’s monetary system, much in the same way the United Nations sought to stabilize amicable relations between countries. The priority was to ensure the breaking of the vicious cycle of competitive devaluations that was a major player in the events leading up to the Great Depression. Although we still have recessions and major setbacks in financial markets today, the IMF strives to hold back the worst of it.
The IMF Today
Even to this day, the IMF seeks to fulfil its initial purpose of keeping the monetary systems of the world in check. However, with financial stock markets and the forex adding more complex systems to the infrastructure of the world’s economy, it remains a constant battle. However the IMF acts as an ideal; their existence promotes sustainable economic relations and growth, strives to increase living standards in a proportional and balanced way, and reduce overall poverty worldwide. It’s truly a noble endeavor; capital and financial markets can afford to grow while the IMF remains vigilant on standby as the world’s economic firefighters.
The IMF as Guardians
One of the ways the IMF helps is through offering loans to struggling countries in times of need; they can balance out those countries ailing economies that can bounce back into the global financial markets due to the stability those loans offer. One major recent example was the struggles that Greece has been going through in regards to the Euro Zone crisis; the IMF stepped in and offered a helping hand. The IMF can function in this regard in a few ways that other similar financial markets and institutions operate. If the current trends are to be believed then financial markets are going to need all the help they can get; it’s a good thing then that the IMF waits in the wings to lend a helping hand.
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