International Monetary Fund (IMF)

The International Monetary Fund grew out of the experience of the Great Depression, when countries raised trade barriers and devalued their currencies one after another and world trade shrank. At the Mount Washington Hotel in Bretton Woods in July 1944, Allied delegates discussed a framework for post-war monetary cooperation, and two visions of the fund competed. The American delegate Harry Dexter White saw it as something like a bank that would make sure borrowers repaid on time; Britain's Keynes saw a cooperative fund members could draw on to maintain economic activity and employment through crises. Most of White's plan went into the final acts.

The Fund formally came into existence on 27 December 1945, when 29 countries ratified its Articles of Agreement; it began operations on 1 March 1947, and on 8 May France became the first country to borrow from it. Treasury Secretary Morgenthau wanted it in New York, but his successor Vinson put it in Washington to avoid the "taint of international finance". Members pay in a quota set by the size of their economy and borrow from the pool when their balance of payments runs short. Quotas also set voting power. Major decisions need 85 percent of the vote, so the United States, with more than 16 percent for most of the Fund's history, has in effect held a veto.

Under the Bretton Woods system the IMF oversaw the exchange rates countries had fixed to the dollar and gave credit to countries in temporary deficit so they could adjust without deflation. From its founding through the 1970s it also allowed capital controls. This design, balancing the rebuilding of international capitalism with national economic sovereignty and welfare, is known as "embedded liberalism". Because of the Cold War most countries in the Soviet sphere did not join until the 1970s and 1980s.

After the United States suspended the dollar's convertibility into gold in 1971 and the Jamaica Accords amended the Articles in 1976, the Fund's role changed. The debt crisis of the 1980s brought it back to the centre of global financial governance, and under pressure from the Reagan administration it moved to structural adjustment programmes that attached market-liberalising reforms to its loans. From the 1980s its staff increasingly favoured free capital movement. The IMF loans South Korea received in the 1997 Asian financial crisis came with conditions to restructure its economy radically and consult the Fund on economic decisions until repayment, and the South Korean public widely perceived them as a debt trap.

Criticism of the IMF centres on loan conditions that impose austerity, slowing recovery and harming the most vulnerable; on the limits they place on borrowers' economic sovereignty; and on voting power weighted towards the West. Joseph Stiglitz, a former chief economist of the World Bank, wrote that a fund designed to finance Keynesian reflation lost its purpose when it turned monetarist, and that it "was not participating in a conspiracy, but it was reflecting the interests and ideology of the Western financial community". In 2016 the IMF's own research department published a report titled "Neoliberalism: Oversold?".