The IMF holds substantial resources in member's currencies and SDRs, as a result ofSelect one:a.It borrowings from the World Bankb.Members' payments of subscriptionsc.Borrowings from the developed countriesd.None of the above
Question
The IMF holds substantial resources in member's currencies and SDRs, as a result ofSelect one:a.It borrowings from the World Bankb.Members' payments of subscriptionsc.Borrowings from the developed countriesd.None of the above
Solution
The correct answer is:
b. Members' payments of subscriptions
The International Monetary Fund (IMF) holds substantial resources in member's currencies and Special Drawing Rights (SDRs) primarily due to the payments of subscriptions by its member countries. When a country joins the IMF, it is assigned an initial quota in the same denomination as its subscription. This quota is essentially the country's financial commitment to the IMF and is a determinant of its voting power. The country must pay its subscription as a mix of its own currency and SDRs or foreign currencies acceptable to the IMF. Therefore, the IMF's resources are largely derived from these subscriptions.
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