International Monetary Fund and SDR Overview

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Questions and Answers

Which statement describes the nature of the relationship between the IMF and the World Bank?

They are completely independent organizations with different mandates

They are both part of the European Union's financial system

They are known as sister institutions established during the Bretton Woods Conference (correct)

They primarily focus on commercial loans to private enterprises

What is the primary purpose of the International Bank of Reconstruction and Development (IBRD)?

To regulate international financial markets

To make loans for infrastructure development in areas neglected by the private sector (correct)

To administer humanitarian aid and disaster relief

To promote international trade and investments

In which year was the International Centre for Settlement of Investment Disputes (ICSID) established?

1966 (correct)

1975

1980

1944

What major event led to the creation of the International Monetary Fund (IMF)?

The Great Depression Signup and view all the answers

How did the United States influence the IMF and the World Bank during the 1940s?

By bypassing them through the Marshall Plan and regional schemes Signup and view all the answers

What mechanism did the Bretton Woods system replace in the international monetary system?

The gold exchange standard Signup and view all the answers

What was one of the principal goals of the Bretton Woods Conference in 1944?

Preventing competitive devaluations of currencies Signup and view all the answers

How is representation within the Bretton Woods institutions typically determined?

By the size of financial contributions made by member countries Signup and view all the answers

What is the primary purpose of Special Drawing Rights (SDR)?

To act as a reserve currency and unit of account Signup and view all the answers

Which currency has the highest weight in the SDR basket?

US Dollar Signup and view all the answers

How often are the weights of currencies in the SDR basket reviewed?

Every five years Signup and view all the answers

What organization has its headquarters in Washington DC and was founded in 1944?

International Monetary Fund (IMF) Signup and view all the answers

Which of the following is NOT one of the goals of the IMF?

Providing military support for member countries Signup and view all the answers

Which currency is listed as having the lowest weight in the SDR basket?

Special Drawing Rights (SDR) Signup and view all the answers

Why were countries not eligible for membership in the International Bank for Reconstruction and Development (IBRD)?

They were not members of the IMF Signup and view all the answers

Which country holds the third highest quota in the IMF?

China Signup and view all the answers

Study Notes

Special Drawing Rights (SDR)

SDR is known as "Paper Gold".
The US dollar has the highest weightage in the SDR basket, holding 43.38%.
The SDR basket includes: US Dollar, Euro, Chinese renminbi, Japanese Yen, and Pound Sterling.
The SDR is a basket of currencies used by the IMF as a reserve currency.
It is a unit of account used for denominating loans and financial transactions.
The IMF reviews and adjusts the weights of currencies in the SDR basket every five years.

International Monetary Fund (IMF)

The IMF is a 190-country organization with headquarters in Washington DC.
Its primary goals include financial stability, international trade facilitation, high employment and economic growth promotion, and poverty reduction.
The IMF helps in correcting balance of payments for member countries and ensuring exchange rate stability.
The IMF was initiated at the Bretton Woods Conference in 1944 and came into operation on December 27, 1945.
The IMF is a specialized agency of the United Nations.
India holds 2.75% of the SDR quota and 2.63% of votes within the IMF.

International Bank for Reconstruction and Development (IBRD)

Popularly known as the World Bank, the IBRD was established in 1944 at the Bretton Woods Conference.
It is headquartered in Washington DC and has 189 member countries.
The World Bank focuses on providing loans to governments for rebuilding infrastructure, such as railroads and highways, where private sector enterprises lack interest.

Bretton Woods Agreement and System

The Bretton Woods Agreement, established in 1944, aimed to create an efficient foreign exchange system, prevent competitive devaluations of currencies, and promote international economic growth.
The agreement led to the creation of the IMF and World Bank.
It replaced the gold exchange standard, allowing the US to have the highest quota.
The US dominated both the IMF and World Bank since their founding.

International Centre for Settlement of Investment Disputes (ICSID)

ICSID is an international arbitration institution established in 1966 for legal dispute resolution and conciliation between international investors and states.
It is a part of and funded by the World Bank Group, headquartered in Washington DC, United States.

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Description

Explore the key concepts and roles of the International Monetary Fund (IMF) and Special Drawing Rights (SDR). This quiz covers the composition of the SDR basket, the importance of the IMF in global financial stability, and its impact on international trade and economic growth. Test your knowledge on these crucial financial topics.