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IMF is short for It’s Mostly Fiscal..

Summary:
Interesting piece by Christian Kopf (Head Fixed income at Union Investment): When the International Monetary Fund was created in 1944, its main purpose was to manage imbalances in trade flows between member states. Its role has changed considerably since the liberalisation of capital flows and the subsequent collapse of the fixed exchange rate system. Over the past 50 years, the IMF has dedicated much of its attention to helping over-indebted countries put their finances in order. It has done so through emergency loans tied to fiscal policy conditions. Hence the long-running joke that the acronym ‘IMF’ is really short for ‘It’s mostly fiscal’. Fiscal policy is taking a central role in the management of the Covid-19 crisis in industrialised nations, albeit not in the way the IMF had

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Interesting piece by Christian Kopf (Head Fixed income at Union Investment):

When the International Monetary Fund was created in 1944, its main purpose was to manage imbalances in trade flows between member states. Its role has changed considerably since the liberalisation of capital flows and the subsequent collapse of the fixed exchange rate system. Over the past 50 years, the IMF has dedicated much of its attention to helping over-indebted countries put their finances in order. It has done so through emergency loans tied to fiscal policy conditions. Hence the long-running joke that the acronym ‘IMF’ is really short for ‘It’s mostly fiscal’. Fiscal policy is taking a central role in the management of the Covid-19 crisis in industrialised nations, albeit not in the way the IMF had envisaged.

The most important message from this year’s IMF-World Bank Group annual meetings is that, for the foreseeable future, monetary policy will no longer be the dominant force in capital markets.

In earlier times, IMF would mainly stand for fiscal austerity. And not it is all about fiscal expansion. But yes, whichever way you look at IMF is It’s Mostly Fiscal…

Amol Agrawal
I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

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