The International Monetary Fund

The International Monetary Fund or the International Monetary Fund (IMF) is an international organization that is responsible in regulating the global financial system and provides loans to its member states to help balance the issues of financial balance of each country. One mission is to assist countries experiencing serious economic difficulties, and in return, the state is obliged to perform certain policies such as privatization of state owned enterprises. After a long consideration and careful, a monetary system agreed at Bretton Woods. Member countries agree to control the rate limit them in ways that have been determined. According to the initial agreement, the rates varied allowed up to one percent below or above par. When a country's exchange rate reached or approached one of the boundaries, so-called "supporters point arbitrage", the central bank intervened to prevent exchange rate market was over the limit. Inntervensi market requires a State to accumulate foreign exchange reserves, which consist of gold and foreign currencies, above the normal trading needs. An agency called the International Monetary Fund IMF, established in the Bretton Woods monetary system to oversee the newly agreed upon. There are some things that have achieved international monetary fund. For example, the agency: Managed to maintain a rapid increase of the volume of trade and investment. Show flexibility in adapting to changes in international trade. The more efficient (even a decline in the percentage of foreign reserves) The more powerful (the agency managed to get through the crisis early in 1971, addressing the speculative activity, and survive in a volatile business cycle). Support the growth of international cooperation. Build the capacity to accommodate the reform and improvement. 2.3 Determination System Currency Converter Exchange rate determination mechanism can be categorized into several groups: Free Float (Free Floating) Under this system, exchange rate allowed to float freely depending on market forces. Some factors that affect exchange rates, eg inflation, economic growth, inflation will be used by the market exchange rate in evaluating the relevant country. If the variable is changed, or appreciation of the variable is changed, foreign exchange rates will change. Free-floating system is also known as clean float.