What is the International Monetary Fund (IMF) ?

The International Monetary Fund (IMF) headquarters building in Washington, DC

The IMF, or International Monetary Fund, is an intergovernmental agency that works to keep exchange rates and the international system of payments stable. It manages this by providing support to countries that run into economic trouble and pose a global economic threat.

It was founded in 1945 following a United Nations conference in Bretton Woods, New Hampshire. The 44 nations attending the conference conceived of the Fund as an economic cooperative that could prevent the devastating cycles of worldwide currency devaluation that worsened the Great Depression.

What does it do?

The IMF works as both an advisor and lender to nations in need of economic assistance. Member countries contribute to a pool of money which is used for loans to countries facing dire economic circumstances. Often the loans are made based upon assurances that certain economic policies and goals will be met by the borrowing nation.

Typical demands include budgetary reforms, tax enforcement, and market-oriented currency regimes. Proponents argue these requirements for IMF loans promote sound fiscal practices and contribute to global economic stability, ultimately benefiting all IMF members.

Critics, however, note that the IMF is generally controlled by Western nations—the number of votes on its executive board is determined by a country's economic influence—and as a result its policies tend to support existing U.S. or European interests.

Under IMF auspices, overseas payments to other nations or creditors sometimes take precedence over social programs, for example. Venezuelan President Hugo Chavez has been particularly critical — he pulled the nation out of the IMF in 2007 — as have some Eastern European leaders.

Today, based in Washington, D.C., 187 nations count themselves as members of the Fund, and 2,500 individuals from 160 countries serve as staff.