How does speculation affect the activities of the IMF? In the early years of its

Question

1. How does speculation affect the activities of the IMF?
2. In the early years of its operation, the IMF was expected to provide liquidity needed to re-build Europe. However, the IMF had too little funding to handle this task. Instead, the liquidity for funding European recovery was provided by a larger U.S. program called  __________________.
3. What types of policies did the World Bank initially emphasize in the immediate post-WWII period?
4. What types of policies did the World Bank emphasize in the 1950s and 1960?
5. What types of policies did the World Bank under Robert McNamara emphasize?
6. What is the difference between

Explanation / Answer

A.1. The significant rise in longer-dated futures prices reflects the perception of continued tightness in the physical market, and is facilitated by increased investor interest. Specualtions of IMF affects whenever someone buys foreign currency.

Crisis prevention measures in a new framework for financial stability

There needs to be a backtracking to the crossroads and take a new turning which is more true to the IMF's original mission of establishing financial stability. That is the road of crisis prevention through establishment of greater stability through better understanding and regulation of capital flows and capital markets; and a more stable system of exchange rates (including among the major reserve currencies, and in the currencies of developing countries).

A.2. In the early years of its operation, the IMF was expected to provide liquidity needed to re-build Europe. However, the IMF had too little funding to handle this task. Instead, the liquidity for funding European recovery was provided by a larger U.S. program called - Global Economy Fund

A.3. 1.) Origin of IFI's -

At the time of Bretton Woods, there was serious concern about the stability of global economic markets. The world-wide depression of the 1930s had been deepened by the instability of international currency markets and the contraction of international trade, so that stabilization of those markets and promotion of trade were considered crucial to avoid another crisis. Likewise, the widespread destruction of Europe and uncertainty about its future also threatened to cause economic and political disruption. The countries allied to fight Nazi Germany and Japan believed that a similar collaborative effort was the only way to stabilize their economies and those of their soon-to-be-defeated enemies and to provide funds to rejuvenate the countries destroyed by the war.

Fiscal discipline (that is, not too much government spending).

2. Redirection of public spending toward education, health, and infrastructure.

3. Tax reform (that is, broadening the tax base and cutting tax rates).

4.Market-determined interest rates.

5. Competitive exchange rates.

6. Trade liberalization (that is, eliminating quotas and tariffs).

7. Openness to foreign direct investment

8. Privatization of state enterprises.

9.Deregulation

10. Legal security for property rights.

A.4.- Macroeconomic Stability Policies were emphasize between 1950 and 1960

A.5.- He adopted aggressive Mission in order to develop Bamks. McNamara believed that there was a direct link between concerns about military security and economic development. For McNamara the threat of warfare was a consequence of the widening income gap between the industrial and developing countries.

a.) Enlarging the Bank

b.) Funding the bank

c.) IDA Replenishment

d.) Pearson Commission

e.) War on Poverty

f.) Oil Crises

g.) Development of Public and Private Sector

A.6. Land reforms have been central to strategies to improve the asset base of the poor in developing countries thought their effectiveness has been hindered by political constraints on implementation.

A.7. No successful implementation of poverty as well improper redisturbution of Land among People

A.8. In 1968, when Bob came to the Bank, it was lending about $1 billion per year. ... He defined this as a condition of deprivation that "falls below any rational definition of ... McNamara becomes President of the Bank,

A.9. Conditionality is typically employed by the International Monetary Fund, the World Bank or a donor country with respect to loans, debt relief and financial aid. Conditionalities may involve relatively uncontroversial requirements to enhance aid effectiveness, such as anti-corruption measures, but they may involve highly controversial ones, such as austerity or the privatization of key public services, which may provoke strong political opposition in the recipient country. These conditionalities are often grouped under the label structural adjustment as they were prominent in the structural adjustment programs following the debt crisis of the 1980s.

A.10. World Bank and IMF conditionality is more important now than ever before.Over the next three years, the world Bank through its Concessional arm, the International Development Association (IDA),will make available $33 billion dollars for poor Countries.The IMF has provided US$18.7 billion to poor countries through its lending facility to Low Income countries; The Poverty Reduction and Growth facility ( PRGF). Through the amount of Financing that the Fund is likely to Provide to Poor Countries. It is actually set to decrease in the coming Years, the Fund will continue to play a significant role in determining poor countries

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