Solutions to Alleviating Poverty

¶ … International Monetary Fund (IMF) is an organization of 187 nations that was created after World War II for the purpose of attempting to stabilize the world economy. Its focus in this regard was on providing a monetary system that could effectively manage exchange rates between nations. At the time of its formation, exchange rates were a particular problem in the world's economy and the IMF was instrumental in establishing an effective system that allowed money to be exchanged between nations. This purpose was largely obviated in the 1970s as the system designed by the IMF following the Second World War was abandoned but at such time the IMF became involved in other financial areas. Today, the IMF is involved in three main areas of concern: surveillance, money lending, and technical assistance.

As part of its surveillance responsibilities, the IMF facilitates the cooperation of its member nations so that the financial policies of one member do not negatively affect the financial policies of the other nations. In performing this function the IMF oversees the financial policies of each member nation while at the same time keeping a watchful eye on the world economy. This surveillance activity is performed constantly and the IMF issues reports detailing its observations and issues said reports. The member nations as part of their responsibilities of membership agree to cooperate with the IMF and the other member nations in order to promote worldwide monetary stability.

In part of its lending authority the IMF periodically lends money to member nations that are experiencing actual or potential balance of payments problems. Through the use of this service member nations are able to rebuild their economies and stabilize their currencies. As a condition of receiving a loan from the IMF the member nation must agree to correct the underlying problem or problems that led to the need for the loan. Importantly, the IMF does not lend money for specific projects.

The final area of involvement is technical assistance. In this function the IMF supports member nations by supporting them in managing their economic policy and other financial affairs.

One example of an IMF project is its efforts to assist African nations in their effort to strengthen their defenses against money laundering, smuggling and participation in international terrorism that has resulted from the illegal diamond trade. The IMF's involvement in this project included lending money and offering workshops to nations affected by this activity in an effort to curtail it.

2. The Grameen system of banking, based on the loaning of uncollateralized monies to the poor, would be as effective in the United States as in any other nation. The "get to know your customer" kind of approach is as badly needed in the U.S. As anywhere else as there is large segment of American society that have no access to credit and Grameen provided this opportunity. The Grameen system has worked effectively in other areas of the world and is an example of why the IMF should consider becoming involved. The grass roots approach used by Grameen is more stabilizing than the broad based approach used by the IMF.