Unit 5 Monetary cooperation: The imf Key terms

Balance of payment – a figure that represents the net flow of money into and out of a country due to trade, tourist expenditures, sale of services (such as consulting), foreign aid, profit, and so forth.

Bank for International Settlements (BIS) – a bank founded in 1930 to promote the cooperation of central banks and to provide facilities for international financial operations. It is not accountable to any national government. The BIS carries out its work through subcommittees, the secretariats it hosts, and through its annual General Meeting of all members. It also provides banking services, but only to central banks, or to international organizations like itself. It is located at Basle in Switzerland.

Beggar-my-neighbour policy – the attempt to promote trade surpluses by trade policies that cause trade partners to suffer trade deficit.

Bretton Woods System – A system of international fi­nance devised in 1944 and based on stable monetary exchange rates, free trade among nations, and mul­tinational financing of the development of poorer countries.

Conditionality - A term that refers to the policy of the International Monetary Fund, the World Bank, and some other international financial agencies to attach condi­tions to their loans and grants These conditions may require recipient countries to devalue their currencies, to lift controls on prices, to cut their budgets, and to re­duce barriers to trade and capital flows Such condi­tions are often politically unpopular, may cause at least short-term economic pain, and are construed by critics as interference in recipient countries' sovereignty.

Countries in transition (CIT) – former communist countries such as Russia whose economies are in transition from socialism to capitalism

Economically developed country (EDC) – An indus­trialized country mainly found in the Northern Hemisphere

Fixed exchange rates – a system under which states establish the parity of their currencies and commit to keeping fluctuations in their exchange rates within narrow limits

Floating exchange rates – an unmanaged process where market forces rather than governments influence the relative rate of exchange for currencies between countries.

General agreement on tariffs and trade (GATT) – an international organization affiliated with the UN that promotes international trade and tariff reductions, now the World Trade Organization.

International Monetary Fund (IMF) – a financial agency with 185 affiliated members with the United Nations, formed in 1945, to promote international monetary cooperation, free trade, exchange rate stability, and democratic rule by providing financial assistance and loans to countries facing financial crises

International monetary system – the financial procedures governing the exchange and conversion of national currencies so that they can be bought and sold for one another to calculate the value of currencies and credits when capital is transferred across borders through trade, investment and loans.

Less developed country (LDC) – Those countries in the poorest of economic circumstances (members of the Third World in the Global South), with a per capita GNP of less than $400 in 1985 dollars

Liberalism – a paradigm predicted on the hope that the application of reason and universal ethics to international relations can lead to a more orderly, just, and cooperative world, and that international anarchy and war can be policed by institutional reforms that empower organizations and international laws for global governance

Neocolonialism – The notion that EDCs continue to control and exploit LDCs through indirect means, such as economic dominance and co-opting the local elite. The economic rather than military domination of foreign countries.

Special Drawing rights (SDR) – Reserves held by the Inter­national Monetary Fund that the central banks of member-countries can draw on to help manage the values of their currencies. SDR value is based on a "market-basket" of cur­rencies, and SDRs are acceptable in transactions between central banks.