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Chapter 24: The International Monetary Fund: Past, Present and Future
Ian W. Marsh and Kate Phylaktis* 1 INTRODUCTION The events of the 1990s, the European currency turmoil early in the decade, the subsequent introduction of the euro, the Mexican crisis of 1994, the Asian crisis of 1997 and the Russian crisis of 1998, have all provoked discussions of reform in the architecture of the international monetary system, and the role of the International Monetary Fund (IMF) in its orderly function. Since its inception in 1944, the IMF has had the responsibility of being the ‘machinery’ in charge of overseeing the international monetary and ﬁnancial system (Camdessus, 2000). The IMF’s role has changed over the years in response to the changes in the economic environment. The changes, however, have come in a piecemeal fashion and always after economic and ﬁnancial shocks to the world economy. In this chapter, we shall trace its evolving role and discuss proposals for future changes, which will strengthen the global monetary system. This discussion is structured as follows. In Section 2, we look at developments over the period from 1944 to 1990. In particular, we look at how the framework of conditionality practice has been shaped over the years, in conjunction with the various ﬁnancial facilities. There are three distinct subperiods: the Bretton Woods System, a period characterized by small demands on the IMF’s resources; the 1970s and the oil price shocks, which gave way to dramatic increases in credit; and in the 1980s the emergence of the international debt problem, which put further pressures on...
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