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The Asian Financial Crisis and the IMF Interventions - Case Study Example

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The paper "The Asian Financial Crisis and the IMF Interventions" highlights that it is important to state that the flow of money and capital can create problems of exchange rates and changes in currency values depending on demand and supply of currencies…
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The Asian Financial Crisis and the IMF Interventions
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Download file to see previous pages This paper seeks to discuss the Asian Financial Crisis of 1997 with a view to tracing the causative events and analyzing the role that the IMF played in intervening and helping resolve the crisis. A discussion of criticisms against IMF policy prescriptions on affected countries will also be made.
The IMF has encouraged members to pursue sound economic policies and open their economies to trade and investment. At the same time, it closely monitors developments in these countries for early signs of trouble so that these countries can be advised to take preventive action. As the record shows, the IMF has not always been successful in this task, justifying the body’s failure as due to the concerned countries not heeding or the body unable to grasp the full implications of what was taking place as in the case of the Asian Financial Crisis.
Against criticisms of its failures, IMF is quick to point out that it did succeed in some of its efforts. It has cited its effective role in preventing chaos as a result of the energy crisis of 1973-74 when it established a mechanism for recycling the surpluses oil-rich exporters and helping finance the deficits of affected countries. In 1989 and thereafter, after the Soviet Union disintegrated, it helped design and finance massive assistance to 26 countries in the process of transition from central planning to liberal market structures. In 1994-95, it played a central role in helping stave off Mexico’s financial collapse and in preventing the spread of the crisis to other markets. Despite the hardships that the IMF imposed on countries it assisted, it has continued to justify its actions by saying that without its help the consequences would have much worse.
The International Monetary Fund (IMF), along with the International Bank for Reconstruction and Development, was established in July 1944 with the burden of regulating the monetary relationships among member economies, or private financial flows, and balance of payments adjustments.  ...Download file to see next pagesRead More
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