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@ Fore casting the financial environment- prices, inflation rates, interest

rate and exchange rate.
@ Management of asset- from cash management to international capital
budgeting, at home and abroad, in domestic and foreign currencies.
@ Management of liabilities- borrowing relationships and decisions, in
domestic and foreign currencies and markets, short term and long
term.
@ Exchange risk management- measuring the effect of exchange rate
changes on balance sheets, income and cash flows, managing these
risks.
@ Performance evaluation and control- accounting for outsiders, the tax
authorities, and for management, and doing so across countries and
currencies without distortion.
  
 



 


 




@ jransparency
@ jhe goal is to make timely, reliable data, plus information about
economic and financial policies, practices, and decision-making,
readily available to financial markets and the public.
@ Developing and Assessing Internationally Accepted Standards
@ Adherence to international standards and codes of good
practices helps ensure that economies function properly at the
national level, which is a key prerequisite for a well-functioning
international system.
@ Financial Sector Strengthening
@ ¯anks and other financial institutions need to improve internal
practices, including risk assessment and management, and the
official sector needs to upgrade supervision and regulation of
the financial sector to keep pace with the modern global
economy.
@ Involving the Private Sector
@ ¯etter involvement of the private sector in crisis prevention and
resolution can limit moral hazard, strengthen market discipline
by fostering better risk assessment, and improve the prospects
for both debtors and creditors.
@ Modifying IMF Financial Facilities and Other Systemic Issues
ô


 
 

    

. jransparency
2. Developing and Assessing Internationally
Accepted Standards
3. Financial Sector Strengthening
4. Involving the Private Sector
÷
 
 
 


 

 

@ Individuals
@ Corporations
@ Governments
@ Financial intermediaries
@ ¯rokers
 
 

 
 

%
%


 

@ jhe first modern international monetary system was the gold
standard
@ Operating during the late  th and early 20th cents.
@ jhe gold standard provided for the free circulation between
nations of gold coins of standard specification.
@ Gold was the only standard of value.
@ During the  20s the gold standard was replaced by the gold
bullion standard
j
 
 

@ In the decades following World War II, international trade was

conducted according to the gold Exchange standard.

@ Nations fix the value of their currencies not with respect to gold,
but to some foreign currency, which is in turn fixed to and
redeemable in gold

@ At the ¯retton Woods international conference in  44, a system

of fixed exchange rates was adopted & International Monetary
Fund came into picture
j   

@ Modified version of Gold Standard adopted by US

@ jhe US treasury would buy and sell gold for foreign

currency only to another government agency

@ Export and import of gold was prohibited

@ the gold price was fixed at $35 an ounce, and the US

government guaranteed that it would control the price
at this level


 
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After the collapse of the ¯retton Woods Agreements,

the world observed a period of high risk in financial
markets. High government deficits, high inflation and
the OPEC oil embarg0o increased financial price
volatility.
@ In this system the gold standard became
Obsolete and the values of various currencies were
to be determined by the market.
¯    
@ During the  30s, many of the world¶s major economies had unstable
currency exchange rates.
@ Many nations used restrictive trade policies.
@ In the early  40s, the United States and Great ¯ritain developed
proposals for the creation of new international financial institutions
that would stabilize exchange rates and boost international trade.
@ In the first three weeks of July  44, delegates from 45 nations
gathered at the United Nations Monetary and Financial Conference in
¯retton Woods, New Hampshire.
@ Delegates met to discuss the postwar recovery of Europe as well as a
number of monetary issues, such as unstable exchange rates and
protectionist trade policies.
@ jhere was also a recognized need to organize a
recovery of Europe in the hopes of avoiding the
problems that arose after the First World War.

@ jhe delegates at ¯retton Woods reached an

agreement known as the ¯retton Woods
Agreement to establish a postwar international
monetary system of convertible currencies, fixed
exchange rates and free trade and subsequently
led to establishment of IMF.
 
 

 


@ Agreement came into force on December 27,  45

@ jhe organization came into existence in May
 46(2 countries signed the article of agreement)
@ Established to promote the health of the world
economy.
@ Headquartered in Washington, D.C
@ 
4 member countries
@ Primary purposes
@ Promote international monetary cooperation
@ Facilitate the expansion and balanced growth of international
trade
@ Promote exchange stability and maintain orderly exchange
arrangements among members.
@ International Monetary Fund (IMF) is an international organization that
provides financial assistance and advice to its member countries and
it helps to-
@ Working to foster global monetary cooperation,
@ Secure financial stability
@ Facilitate international trade
@ Promote high employment and sustainable economic growth
@ Reduce poverty