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International Monetary fund which was given the task of implementing and monitoring the__________

International Monetary fund which was given the task of implementing and monitoring the__________

Looking for the answer to the question below related to Financial Management ?

International Monetary fund which was given the task of implementing and monitoring the__________

 Options:

A. BWS
B. IBRD
C. Nixon Stock
D. BSW

The Correct Answer Is:

  • A. BWS

The correct answer is A. BWS, which stands for the “Bretton Woods System.”

Why A (BWS) is the Correct Answer:

The International Monetary Fund (IMF) was given the task of implementing and monitoring the Bretton Woods System (BWS). The Bretton Woods System was a post-World War II international monetary system that aimed to establish a framework for stable exchange rates and international economic cooperation. Here’s a detailed explanation of why A is the correct answer:

1. Bretton Woods Conference:

The Bretton Woods System was created during the Bretton Woods Conference, which took place in Bretton Woods, New Hampshire, USA, in July 1944. Delegates from 44 Allied nations attended the conference to design a new international monetary and financial order after World War II.

2. Key Agreements:

During the Bretton Woods Conference, two key agreements were reached: the creation of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which later became part of the World Bank Group. These institutions were established to implement and oversee the Bretton Woods System.

3. IMF’s Role:

The IMF’s primary role within the Bretton Woods System was to oversee the exchange rate arrangements of member countries and provide financial assistance to member countries facing balance of payments problems.

Member countries agreed to fix their exchange rates to the U.S. dollar, which was itself pegged to gold at a fixed rate of $35 per ounce. The IMF was responsible for ensuring that member countries maintained exchange rates within a certain range of their par values (official exchange rates).

4. Adjustment Mechanism:

If a member country’s exchange rate exceeded the allowable range, the IMF would work with the country to restore stability. This could involve adjusting the country’s exchange rate, implementing policy measures, or providing financial support in the form of loans.

5. Monitoring and Surveillance:

The IMF also played a role in monitoring the economic policies and exchange rate stability of member countries. It conducted regular consultations with member countries to assess their economic and financial situations and make policy recommendations.

6. Transition and Demise:

The Bretton Woods System, with the IMF at its core, functioned for several decades but faced challenges due to economic imbalances and inflationary pressures. It ultimately collapsed in 1971 when President Richard Nixon suspended the U.S. dollar’s convertibility into gold, effectively ending the fixed exchange rate system.

Why the Other Options are Not Correct:

B. IBRD (International Bank for Reconstruction and Development):

The IBRD, also established during the Bretton Woods Conference, focused on providing financial and technical assistance for post-war reconstruction and development projects, particularly in war-torn Europe. While it played a critical role in development finance, it did not have the primary responsibility for implementing and monitoring the Bretton Woods System. That role belonged to the IMF.

C. Nixon Stock:

“Nixon Stock” does not correspond to any recognized international institution, agreement, or concept related to the post-World War II monetary system. It is not relevant to the task of implementing and monitoring the Bretton Woods System.

D. BSW:

“BSW” is not a recognized abbreviation or term related to international monetary systems or institutions. It is not relevant to the context of the Bretton Woods System or the role of the IMF.

In conclusion, the correct answer is A (BWS) because the International Monetary Fund (IMF) was given the task of implementing and monitoring the Bretton Woods System (BWS), which was a landmark international monetary system established after World War II. The other options do not pertain to the specific task and responsibilities of the IMF within the Bretton Woods System.

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