The IMF: Purpose and Tools

The International Monetary Fund was created to promote monetary cooperation, stable exchange rates and the growth of trade, and to lend to members facing balance of payments problems. Each member contributes a quota, which determines how much it pays in, how much it can borrow and how many votes it holds. Because quotas reflect economic size, rich countries dominate decision-making; the United States holds roughly 16–17 percent of votes, enough to veto major decisions that need an 85 percent supermajority.

The IMF's main activities are surveillance of members' economies, lending in crises and technical assistance, such as helping countries build tax systems and statistics. After the collapse of fixed exchange rates in the 1970s its focus shifted toward developing countries and, later, financial crises in emerging markets and Europe. Supporters see it as a global firefighter that prevents panics from spreading; critics question its governance and the conditions attached to its loans.