International Monetary Fund

International Monetary Fund. The International Monetary Fund (IMF) was the most important international organization to emerge from the Bretton Woods Conference of 1944. Following the competitive monetary devaluations during the depression years of the 1930s, diplomats became convinced of the central importance of currency stability to the international economic system. Anglo‐American discussions during World War II focused on the creation of an institution that would promote international monetary cooperation and aid countries in maintaining the value of their currencies, particularly in times of crisis. While British diplomats, notably John Maynard Keynes, sought an activist institution, American planners, wary of giving a blank check to debtor nations, sought and won an IMF with circumscribed lending authority and stringent rules.

The IMF started operations in 1946 with around eight billion dollars in funds from its member nations. A weighted voting system allocated votes according to the size of each country's contribution. While this system gave the United States the largest voting share, the managing director of the IMF has never been an American. Yet the United States has made full use of the IMF as an instrument of its policy. During the period 1946–1971, the IMF helped nations to remain within a fixed‐rate, dollar‐ and gold‐based international economic order. After August 1971, when the administration of Richard M. Nixon decoupled the link between the dollar and gold and moved currencies from fixed to floating valuations, the IMF began to play a more important role in international economic relations, especially during the energy crisis of the 1970s and the Third World debt crisis of the 1980s. IMF loans were available to nations in financial distress, provided they agreed to various conditions designed to nurse the economy back to fiscal health.

The Soviet Union refused to join the IMF, but after its collapse, the IMF played a major role in distributing Western aid to Russia. The IMF was also instrumental in the post–Cold War era financial rescue of Mexico in 1994–1955 and in handling the Asian economic crisis of 1998.
See also Depressions, Economic; Gold Standard; Internationalism; Monetary Policy, Federal.

Bibliography

Margaret De Vries , The IMF in a Changing World, 1945–1985, 1986.
Harold James , International Monetary Cooperation since Bretton Woods, 1996.

Diane B. Kunz