The present international monetary system lacks in clarity in operation. Often, the policies formed and implemented by the IMF and World Bank lacks theoretical justification. One such policy might be their strong position as the proponents of laissez-faire. The free economy without any sort of government intervention does not always lead to economic welfare. Consequences of such a free economy are well illustrated in history. A few years before the economy of Argentina suffered a crash and before that the so-called’ roaring tigers of the south’ reduced to paper tigers following the free market regime.
South Korea followed full capital account convertibility much sooner than it deserved and after initial flourish, they were almost bankrupt. Even in India their current economic success reflected through the abnormal rise in SENSEX came in an exchange of a pretty high inflation rate that burdens the common people. A mutually beneficial relationship can be framed with the collaboration between the national government and the agents of the IMS. The national governments are well aware of their situation, knowing much better what are their actual needs. IMF and World Bank are equipped with the necessary finance to extend help to the poorer countries.
Therefore a golden handshake between the national government and the IMS agents will lead to a beneficial collaboration. The USA took a major role in shaping the international monetary system. It is the largest contributor in IMF and thereby often tries to dictate the terms for the other nations. The IMS in order to achieve a universal acceptance must get rid of this kind of impediments. The IMS has a much bigger responsibility than to look after the responsibility of any individual country.
A more detailed explanation of each of its policies especially to the recipient countries would be more beneficial to attain that. Often some of the academicians suggest an introduction of a common currency among all nations would facilitate the operation of the IMS to a great extent.
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