International liquidity -Function of IMF

                                 International liquidity &  IMF

 International liquidity is the part of the concept of international finance. International liquidity is foreign currency or gold in the reserve of any country. It is very useful to pay the amount of imported goods and reduce balance of payment deficit. Every country should increase exports for reducing international liquidity shortage. In short, the term 'international liquidity' connotes the world supply of reserves of gold and currencies which are freely usable internationally, such as dollars and sterling, plus facilities for borrowing these. Thus, international liquidity comprises two elements, viz., owned reserves and borrowing facilities.

                         The International Monetary Fund  IMF
The International Monetary Fund (IMF) is an International organization headquartered in Washington, D.C., in the United States of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.Created in 1945, the IMF is governed by and accountable to the 188 countries that make up its near-global membership

                                   Function of  IMF
The IMF works to foster global growth and economic stability by providing policy, advice and financing to members, by working with developing nations to help them achieve macroeconomic stability, and by reducing poverty The rationale for this is that private international capital markets function imperfectly and many countries have limited access to financial markets. Such market imperfections, together with balance-of-payments financing, provide the justification for official financing, without which many countries could only correct large external payment imbalances through measures with adverse economic consequences. The IMF provides alternate sources of financing.

Member countries of the IMF have access to information on the economic policies of all member countries, the opportunity to influence other members’ economic policies, technical assistance in banking, fiscal affairs, and exchange matters, financial support in times of payment difficulties, and increased opportunities for trade and investment.

(1) Providing short terms credit to member countries for meeting temporary difficulties due to adverse balance of payments.
(2)Reconciling conflicting claims of member countries.
(3) Providing a reservoir of currencies of member-countries and enabling members to bor­row on another currency.
(4) Promoting orderly adjustment of exchange rates.
(5) Advising member countries on economic, monetary and technical matters.

                                              Resources of IMF
IMF is a pool of central bank reserves and national currencies that are available to member countries under specified conditions.
The capital of the IMF consists of the aggregate of the quotas allotted to the member countries member can pay its quota in its national currency.
The IMF utilizes its gold holdings to acquire dollars and other currencies for its opera­tions
.
                                                  Operations
The IMF has shown great interest in the economic development of under development countries. It has made a steady progress towards the establishment of a multilateral system of payment in respect of current transactions.
It has simplified the multiple exchange system. The IMF has promoted exchange rate stability and expansion of world trade.
It has provided an excellent forum for the discussion and solution of economic, fiscal and financial problems having an international impact.
The IMF has granted undue credit to some countries. Its insistence on devaluation in some cases proved ill advised. It has followed a week policy in the fixation of exchange rate.
It has been charged as being partial to developed countries and not helping adequately the under developed countries.