Money Matters: An IMF Exhibit -- The Importance of Global Cooperation

Reinventing the System (1972-1981)



Conflict &
(1871 - 1944)

Destruction &
(1945 - 1958)
The System
In Crisis

(1959 - 1971)
the System
(1972 - 1981)
Debt &

(1981 - 1989)
Globalization and Integration
(1989 - 1999)
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IMF surveillance:

IMF Surveillance involves continuous examination by the Fund of the economic, monetary, fiscal, and exchange policies of member countries, and their domestic and international consequences, carried out with the cooperation of those countries. As part of this examination an economic report on each country, is prepared by the IMF staff, discussed in the IMF's Executive Board and released to the public when the member concerned agrees. Surveillance thus promotes the openness and soundness of each member's policies and assists all member countries in their economic dealings with one another.



An embargo legally prohibits some or all trade with a foreign country. Governments resort to embargo to express displeasure with the policies of another country and to attempt to coerce the country to change its policies.


IMF Oil Facilities:

The two IMF Oil Facilities were Fund initiatives to channel borrowed money at below-market rates of interest to developing countries hardest hit by the rise in oil prices that began in 1973. They were temporary measures.


Excess liquidity:

Excess liquidity is the condition of countries' having too much money in circulation. For example, in the late 1970s, the rise in oil prices brought in a flood of money (more than could be immediately spent) into the oil-producing countries. Prudently, these countries placed much of this excess money in banks, which soon found themselves having excess liquidity: more money than they could conveniently lend.


Central banks:

Central banks are institutions responsible for overseeing the banking system, managing official international reserves, and adjusting monetary conditions-in particular, short-term interest rates-in order to keep the economy on course. In the United States, the Federal Reserve System performs these functions. Their charters often make central banks independent of government so as to avoid unhelpful political influence.


Interest rates:

Interest rates are the cost of borrowing money. When a central bank (the institution in each country which adjusts monetary conditions and manages international reserves) decides to change the interest rate on money it lends to banks, the banks respond with a corresponding change in the interest rate on money they lend to businesses and private individuals. Central banks raise short-term interest rates to discourage borrowing, slow economic growth, and hold inflation in check. They lower short-term interest rates to spur economic growth by encouraging business investment and consumer spending.


Would Floating Rates
Sink the System?
OPEC Takes Center Stage Petrodollar Problem
Recycling Petrodollars Stagflation Rush from the Dollar War on Inflation

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