Founded 53 years ago in the turbulent era of the 1940s to stabilise the world economy, the International Monetary Fund (IMF) has become outdated, ineffective, and unnecessary. Most of the economic conditions that led to the IMF's creation no longer exist; in addition, the Fund has failed to achieve most of its own newly defined roles, a preponderance of which merely duplicate the functions of other existing agencies and organisations.
When the IMF was founded, economies around the world were in shambles following the Great Depression of the 1930s and the devastation of World War II. The poor economic policies pursued by many countries during the 1930s had left currency values uncertain, hindering trade. Those who created the IMF believed that it could help restore confidence in the world's currencies by establishing a specified value for each currency in relation to an amount of gold, a practice known as the gold standard.
The IMF maintained these values by infusing money into world financial markets, but its efforts had mixed results.
When the gold standard was abandoned in 1971, it was replaced by a "floating" exchange rate system that allowed currencies to fluctuate in value. Bereft of its old mission, the IMF chose a new one: to act as a development bank for poor countries. The data for the past three decades, however, demonstrate conclusively that most of the less developed countries receiving IMF loans have the same or lower per capita wealth today than they had before receiving these loans.
Many of the missions the IMF has chosen to undertake do not require any involvement by the Fund. Congress should examine the IMF's overall effectiveness in accomplishing its stated purposes, as well as its impact on poor and developing countries. If it does, it will find that the IMF...