Question : Which of the following organizations plays a significant role in promoting international monetary cooperation and exchange rate stability?
Option 1: World Trade Organization (WTO)
Option 2: International Monetary Fund (IMF)
Option 3: World Bank
Option 4: Organization for Economic Cooperation and Development (OECD)
Correct Answer:
International Monetary Fund (IMF)
Solution : The correct answer is b) International Monetary Fund (IMF)
The International Monetary Fund (IMF) plays a significant role in promoting international monetary cooperation and exchange rate stability. It is an international organization that works to foster global economic stability and growth.
The IMF's primary functions include:
1. Surveillance: The IMF monitors the economic and financial developments of its member countries and provides policy advice to promote stability and sustainable growth. It assesses exchange rate policies and helps countries address imbalances and vulnerabilities.
2. Financial Assistance: The IMF provides financial assistance to member countries facing balance of payments problems. This assistance is designed to help countries stabilize their economies, restore confidence, and promote sustainable economic growth.
3. Technical Assistance and Capacity Development: The IMF provides technical assistance and training to member countries to strengthen their economic institutions, policy frameworks, and capacity to manage economic challenges effectively.
4. Promoting Exchange Rate Stability: The IMF plays a role in promoting exchange rate stability by encouraging countries to adopt sound exchange rate policies, avoid competitive devaluations, and manage exchange rate fluctuations in a way that supports sustainable economic growth.
While the other organizations listed (World Trade Organization, World Bank, and Organization for Economic Cooperation and Development) are also important international institutions, their primary focus is different from that of the IMF. The WTO deals with international trade rules and disputes, the World Bank focuses on providing financial assistance and development projects, and the OECD promotes economic cooperation and policy coordination among its member countries.
