Looking for the answer to the question below related to Financial Management ?
__________ monitors the balance of payments of its member nations.
|A. World Bank
The Correct Answer Is:
- B. IMF
The correct answer is B. IMF (International Monetary Fund) because the IMF is the international organization responsible for monitoring the balance of payments of its member nations. Let’s explore in detail why the IMF is the correct choice and why the other options (World Bank, WTO, and IFC) are not.
IMF (International Monetary Fund):
The IMF is an international financial institution established to promote international monetary cooperation and exchange rate stability. One of its primary functions is to monitor the balance of payments of its member nations. The balance of payments is a record of a country’s economic transactions with the rest of the world, including trade in goods and services, financial flows, and capital movements.
The IMF assesses member countries’ balance of payments to help ensure economic stability and address potential balance of payments problems. It provides financial assistance and policy advice to member countries facing balance of payments crises. This focus on monitoring and stabilizing the balance of payments makes the IMF the correct choice for this role.
The World Bank primarily focuses on providing financial and technical assistance to governments in developing countries for a wide range of development projects, such as infrastructure, healthcare, education, and poverty reduction. It does not have a mandate to monitor or address balance of payments issues.
The World Bank’s primary goal is to support long-term economic development, rather than dealing with short-term macroeconomic issues like balance of payments. Therefore, the World Bank is not the correct choice for monitoring the balance of payments.
WTO (World Trade Organization):
The World Trade Organization is responsible for regulating and overseeing global trade between nations, dealing with trade rules, and resolving trade disputes. It does not have a mandate to monitor or assess the balance of payments of its member nations.
The WTO’s primary focus is on trade-related issues and trade agreements, rather than macroeconomic or financial stability. Therefore, the WTO is not the correct choice for monitoring the balance of payments.
IFC (International Finance Corporation):
The International Finance Corporation, as a member of the World Bank Group, primarily focuses on promoting sustainable investments in the private sector of developing countries.
It does not have a mandate to monitor or address balance of payments issues. The IFC’s activities are centered around private sector development and sustainability, not macroeconomic or financial stability. Therefore, the IFC is not the correct choice for monitoring the balance of payments.
In summary, the IMF is the correct choice because it is specifically designed to monitor and address balance of payments issues among its member nations. The IMF plays a crucial role in providing financial assistance and policy advice to countries facing balance of payments problems, helping to maintain global economic stability.
While the other organizations have important roles in various aspects of international development, trade, and private sector investment, they do not have the primary mandate of monitoring and addressing balance of payments issues. Supporters of balance of payments monitoring should look to the IMF as the most relevant organization to achieve their goals.
- ________ deals with the global rules of trade between nations.
- _________ supporters’ sustainable investments in the private sector.