International Monetary Fund :: essays research papers

-International fiscal lineage-Addressing Fundamental Economic Goals On an International LevelThe International M unitytary Fund is an important section that makes world trade less strenuous. The International Monetary Fund, or IMF as it is called, provides support and supervision to nations in all stages of frugal progress. International trade is a key element to enable nations, large and small, to strengthen their economical positions. Larger nations need the international market to export their goods and services, and littler nations also need this world scale market to import products so they are able to produce more efficiently. In order to achieve these goals, one major component must be in place. The ability to value other nations currency. Throughout the years, many different ways have been used to do this, mostly ending in failure. There is no perfect way to accurately measure the true value of another countrys currency. The International Monetary Fund is an effort to s ee each countrys economic position, offer suggestions, and provide the fundamental economic security that is essential to a thriving (world) economy. Many of the domestic economic goals are reiterated by the INF on an international level. To understand the current INF we will investigate the events leading up to its existence. Between 1879 and 1934 major nations used a manner of international exchange known as the Gold Standard. The Gold Standard was simply a fixed-rate system. The rate was fixed to gold. In order for this system to function properly three things had to happen. First, each nation had to define its currency to gold (this definition then could not change). Second, each nation must than maintain a fixed relationship to its supply of money and its amount of actual gold. Third, the on-hand gold must be allowed to be exchanged freely between any nations passim the world. With all of those policies successfully in place, the exchange rates of the participating countries would then be fixed to gold, therefore to each other. To successfully maintain this relationship more or less adjustments had to be made from time to time. For example, two countries A and B are doing international business together and A buys more of Bs products than B buys of As. Now B doesnt have enough of As currency to pay for the excess products purchased. B now has whats called a balance of payment deficit. In order to correct for this deficit the sideline must occur Actual gold must now be transferred to A from B.