The International Monetary Fund (IMF) is an international institution and a specialized agency of the United Nations, currently with 190 member countries. It was conceived in July 1944 at the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire, and formally established in December 1945. The IMF was created to solve the problem of international financial instability and prevent a recurrence of the competitive currency devaluations that contributed to the Great Depression of the 1930s.
The IMF's core mechanism is outlined in Article I of its Articles of Agreement, which lists its purposes, including promoting international monetary cooperation, facilitating the expansion of international trade, and promoting exchange rate stability. It operates through a quota system, where each member country's contribution, based on its relative size in the global economy, determines its voting power and access to financial resources. The IMF's work involves three main functions: surveillance (monitoring global and national economies), financial assistance (providing short- and medium-term loans to countries facing balance of payments difficulties), and capacity development (technical assistance and training).
The IMF is closely connected to the World Bank, as both institutions were founded at the 1944 Bretton Woods Conference. While the IMF focuses on macroeconomic and financial stability, the World Bank concentrates on long-term economic development and poverty reduction.
In recent years, the IMF has adapted its focus to address new global challenges, such as the economic aspects of climate change, digital payments and finance, and the impact of Artificial Intelligence. However, its core purpose of supporting the global public good of financial stability remains the same. A notable recent change is the reported increase in the size of austerity cuts required from borrowing countries, with median annual IMF-required cuts quadrupling between the 2012-2017 and 2018-2025 periods.