The uniqueness of the IMF lies in its ability to adapt and change with circumstances. Founded at the end of the Second World War, its purpose has been economic stability and prosperity through the bonds of cooperation and integration. Its “constitution”—the Articles of Agreement that emerged from Bretton Woods—has proved to be a remarkable feat of engineering: strong enough to stand the test of time and flexible enough to enable the IMF to respond to the many challenges that have faced its membership through the years.
The IMF began by contributing to reconstruction in Europe after the war. It moved on to include newly independent nations, helping them gain a foothold in the global economy after decolonization, and its membership also thrived as it assisted former communist countries in making the transition to market economies following the fall of the Iron Curtain.
The IMF helped the global economy adapt to a new and unnerving world after the original system of fixed exchange rates unraveled in the early 1970s. Since then, it has supported its members in overcoming a variety of financial crises in different regions—in Latin America in the 1980s, Asia in the 1990s, Latin America again in the 2000s, and all over the world in the wake of the Great Recession.
Unprecedented response to the crisis
The recent crisis generated unprecedented challenges, and the IMF responded in an unprecedented way—through its early call for global fiscal stimulus; through the sheer scale of its financial support; and through the creation of new tools like zero interest loans for low-income members and crisis prevention insurance for middle-income members. The IMF has also been a highly sought-after partner in capacity building: demand for its technical advice and training courses has originated from across the entire membership in recent years.
This crisis prompted the IMF to rethink its analysis and adapt its policy advice. It became more acutely aware of the growing interconnectedness of the global economy—and conscious of how policies in one country can affect others through economic and financial “spillovers.” Analysis of risks and vulnerabilities is now front and center in the IMF’s surveillance work, and the distillation of cross-country experience remains a hallmark of its policy advice.
The road ahead
In the near future, the IMF will need to continue to help members deal with the consequences of the financial crisis, especially low growth...