When the IMF provides loans, it must be approved by the executive board with more than 85% voting rights. Therefore, the United States and Europe are often regarded as the leaders of this organization.
For example, 1997, during the Asian financial crisis, the aid condition was to further open the market and so on. This is a dilemma for the recipient countries. On the one hand, they are in urgent need of loans, on the other hand, they are unwilling to accept additional conditions. Even in Greece, Spain, Hungary and other European countries, although the European Union has great influence on the IMF, their loans are attached with additional harsh conditions such as deficit reduction.
Special Drawing Rights (SDR) Special Drawing Rights (SDR) is a unit of value created when the International Monetary Fund Agreement was first revised in 1969, in order to solve the shortage of international reserves caused by the unbalanced development of international trade and international finance after the 1960s, and its value is expressed in several different currencies.
As an international cooperative economic organization, the functions of the IMF do not include currency creation, so SDR is not a currency, nor is it a creditor's right of the IMF, but a potential creditor's right to currencies freely used by IMF member countries, because SDR holders can exchange SDR for these currencies.
The value of SDR as an international reserve asset comes from the commitment of member States to hold and accept SDR and fulfill the obligations related to the operation of SDR system. General drawing rights give member countries the right to lend reserve assets from the IMF, while special drawing rights increase global reserve assets out of thin air, and member countries can be allocated special drawing rights proportional to their shares to increase their liquidity without repayment.
Ordinary loan is a loan generated by general drawing rights, and it is a general form of borrowing IMF funds, aiming at the international balance of payments imbalance that generally occurs in member countries. The loan fund is the share paid by IMF member countries, with a term of no more than five years, and the interest rate increases with the term. The accumulated amount of ordinary loans borrowed by member countries shall not exceed 65,438+0.25% of their shares. The IMF adopts a grading policy for ordinary loans, that is, the drawing rights of member countries are divided into reserve loans and credit loans.
Since reserve tranche is regarded as the international reserve of member countries in MIF, it actually refers to the 25% share paid by member countries in SDR or convertible currency. Although, like other IMF loans, the withdrawal of reserves must be based on the needs of the balance of payments, the IMF has no right to object to the needs put forward by member States.