Tuesday, September 22, 2009



US, UK, Germany, Japan, France, and Ibzndia.


At the time of establishment the IMF had $ 8.8 billion as its fund provided by member countries. The amount was raised to $ 14.74 billion on January 1, 1961. It was further raised in 1962 by borrowing from ten rich countries. Every member is required.

1. To pay 25% of its share in dollars or in gold.
2. Or to pay two % of it total gold and dollar reserves.


Each member is assigned a quota that establishes its voting power, subscription and the limit of foreign exchange amount which it can borrow. Each member is required to subscribe partly in gold and partly in its own currency.

The Fund has designed the following banks as the custodian of its gold reserves:

1. The Federal Reserve Bank of New York.
2. The Bank of England.
3. The Bank Of France.
4. The Reserve Bank of India.

The IMF holds its currency subscription for the most part in the form of non-interest-bearing and non-negotiable notes that may be cashed on demand.

Every member is required to contact IMF to buy gold for its reserves. However,, if gold is available at better terms in the open market the member can buy from there.

Every member can withdraw from its quota up to 25% each month.

If a country is compelled to borrow from the Fund time and again the fact indicates that the country is facing the problem of balance of payment. Under such circumstances the fund will take the following measures.

1. The IMF will warn the country and demand of it to investigate into excess of imports over exports.
2. It will propose to the member to lend to the IMF in its own currency.

If the above measures fail the Fund will declare the country's currency as 'Short' and will resort to rationing of its currency.

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