International Monetary Fund

The International Monetary Fund (IMF) is a legally, organisationally and financially independent specialised agency of the United Nations with headquarters in Washington, D.C., USA.

The IMF's main task is to grant loans to countries without sufficient currency reserves that are experiencing balance of payments difficulties. Other areas of activity are the promotion of international cooperation in monetary policy, expansion of world trade, stabilization of exchange rates, surveillance of monetary policy and technical assistance.

The IMF and its sister organization, the World Bank, have their origins in the Bretton Woods system of fixed exchange rates created in 1944, which was based on the US dollar, then the reserve currency backed by gold. They were envisaged as international governance instruments designed to prevent a repeat of the currency turbulence of the interwar period and the mistakes of the gold standard of the 1920s. Both organizations are therefore referred to as the Bretton Woods institution. The IMF's lending is subject to economic policy conditions designed to ensure repayment of the loans. Unlike the IMF, the World Bank also grants loans for special projects.

The IMF currently (as of April 2020) has 189 member countries, whose voting rights are based on their capital share. The member states with the largest voting shares are: United States 16.51%, Japan 6.15%, China 6.08%, Germany 5.32%, France 4.03%, United Kingdom 4.03%, and Italy 3.02%. Of the German-speaking countries, Luxembourg also has 0.29%, Austria 0.81%, Switzerland 1.18% and Belgium 1.3% of the vote.

Decisions in the IMF must be taken with a majority of 85%. This means that the USA alone and the EU states together have a de facto blocking minority.

History

Against the background of the negative monetary experiences in the 1930s, Great Britain (Keynes Plan) and the USA (White Plan) in particular negotiated a new international monetary system, which was finally successfully concluded with the conference in Bretton Woods, a small town in the US state of New Hampshire. These negotiations, which were decisive for the reconstruction of the world economic system, lasted from July 1, 1944 to July 22, 1944, where John Maynard Keynes, with the Keynes Plan he had developed, was unable to prevail against the White Plan preferred by the USA.

As the institutional center of the new system, the IMF was established by international agreement in December 1945. Some previously exclusive national decision-making rights were transferred to it. It began its initial work in May 1946. Its actual operational activities began on 1 March 1947.

Following a resolution of the Bundestag on 28 July 1952, the Federal Republic of Germany joined the IMF on 14 August 1952.

Member States

189 countries are members of the IMF, including all United Nations member states except Andorra, Cuba, Liechtenstein, Monaco, and North Korea. Kosovo, which is not a member of the UN, joined the IMF in 2009. The island nation of Nauru became the 189th member state on April 12, 2016.

Shares and voting rights of Member States

In October 2010, the G20 finance ministers decided that the voting shares of the 187 member states at the time should be redistributed in favor of developing countries and emerging markets, and that the Fund's flexibly available financial resources should be doubled. This was "the most important reform of IMF governance since its inception," according to then Managing Director Dominique Strauss-Kahn. The reforms took effect in January 2016.

According to the IMF's Articles of Agreement, its headquarters must be maintained in the country with the most voting rights.

The share of votes of the 18 euro states is 22.53 percent. The European Commission has proposed that the euro states combine their votes.

Shares and voting rights and governors of the member states with the twenty largest voting shares (as of April 2020):