[*Tenmillion] I’m going to start with the IMF and the role they play in Iraq’s exchange rate policy
[*Tenmillion] I’ll start with a brief definition of the IMF’s purpose
[*Tenmillion] the IMF is made up of 187 countries whose objective is to promote world economic stability and growth
[*Tenmillion] When a country joins the IMF, it is assigned a quota based on economic size and character. A quota formula is used and a member’s quota subscription determines the maximum amount of financial resources the member is obligated to provide to the IMF. A member must pay its subscription in full upon joining the Fund: up to 25 percent must be paid in SDRs or widely accepted currencies (such as the U.S. dollar, the euro, the yen, or the pound sterling), while the rest is paid in the member’s own currency.
[*Tenmillion] In return, the IMF provides its members with macroeconomic policy advice, financing in times of balance of payments need, and technical assistance and training to improve national economic management
[*Tenmillion] the IMF is made up of Articles of Agreement where its functions are to promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation
[*Tenmillion] headquartered in Washington D.C. where the U.S. has the largest percentage of total votes
[*Tenmillion] the IMF uses a system called the General Data Dissemination System (GDDS) to gather economic and financial data on member countries for economic analysis
[*Tenmillion] OK…Special Drawing Rights….I’m going to keep this short because this is an entire chapter and you can learn more about these on the IMF website if you wish….but it’s….
[*Tenmillion] An international type of monetary reserve currency, created by the International Monetary Fund (IMF) in 1969, which operates as a supplement to the existing reserves of member countries. Created in response to concerns about the limitations of gold and dollars as the sole means of settling international accounts, SDRs are designed to augment international liquidity by supplementing the standard reserve currencies.
[*Tenmillion] You can think of SDRs as an artificial currency used by the IMF and defined as a “basket of national currencies”. The IMF uses SDRs for internal accounting purposes. SDRs are allocated by the IMF to its member countries and are backed by the full faith and credit of the member countries’ governments
[*Tenmillion] ok….I want to address IMF Article VIII and Article XIV
[*Tenmillion] but first some information about Article IV which is the core article that outlines the members and the IMF’s responsibilities in surveillance. Surveillance is where the IMF monitors the economic and financial policies of its member countries. There is collaboration between the government/central bank, and the IMF, about economic data that is collected . Surveillance is done annually for each member country.
[*Tenmillion] Here is Article IV on the IMF site…. http://www.imf.org/external/pubs/ft/aa/aa04.htm
[*Tenmillion] Article IV – Obligations Regarding Exchange Arrangements