overview

In its early years, the International Monetary Fund (IMF) promoted exchange rate stability through its central role in the “par value” system created at Bretton Woods. The mandate enshrined in its Articles of Agreement left plenty of room for interpretation, but its central mission was narrowly focused. The par value system came crashing down in the early 1970s, and the Fund adapted its main tools - consultation procedures that evolved into an apparatus for multilateral economic surveillance and conditional financing arrangements - to a new environment. In practice, the mission advanced with these tools, as well as with various forms of technical assistance provided to members centered on promoting the cause of open, contestable, well-governed, and transparent markets. Although that mission continues to emphasize those markets within member-states that most directly link the current account of national payments balances with one another, during the past two decades the Fund has increasingly concerned itself with structural factors shaping the capital account.

Early in 1998, its Managing Director stated that the Fund’s central objectives now encompassed the following:

• restructuring financial sectors, where owners and managers can be genuinely accountable for the prudent operation of banks, “where loans are made on the basis of objective commercial criteria,”

• promoting transparent, independently audited corporate balance sheets, and consolidated financial statements in the case of business conglomerates “so that markets can monitor corporate performance,”

• creating “a more level playing field for private sector activity” by dismantling monopolies, eliminating government-directed lending, increasing the transparency of foreign trade procedures, and revising government procurement and contracting regulations.