The Board of Governors is the highest decision-making body of the IMF. It consists of one governor and one alternate governor for each member country. The governor is appointed by the member country and is usually the minister of finance or the head of the central bank.

Background
The International Monetary Fund (IMF) was established at a United Nations Monetary and Financial Conference, also known as Bretton Woods Conference, on 22 July 1944 as an organ under the UN System. The IMF headquarters is located in Washington D.C., U.S.A.

Under its Articles of Agreement (http://www.imf.org/external/pubs/ft/aa/index.htm), the IMF is responsible for promoting international monetary cooperation; facilitating the expansion and balanced growth of international trade; promoting exchange stability; assisting in the establishment of a multilateral system of payments; and providing resources available to members experiencing balance of payments difficulties.

Main Functions
The IMF employs three main functions - surveillance, financial assistance, and technical assistance – to promote the stability of the international monetary and financial system.

Surveillance:
The IMF closely monitors each member country's economic and financial developments and regularly holds a policy dialogue with a member country (also known as Article IV Consultation), usually once each year, to assess its economic conditions and provide policy recommendations.

The IMF also reviews global and regional developments and outlooks based on information from individual consultations. The IMF semi-annually publishes such assessments on multilateral surveillance through the World Economic Outlook and the Global Financial Stability Report.

Financial Assistance:
The IMF lends to its member countries facing balance of payments problems in order to facilitate the adjustment process and restore member countries' economic growth and stability through various loan instruments or "facilities". An IMF loan is usually provided under an "arrangement," requiring a borrowing country to undertake the specific policies and measures to resolve its balance of payments problem as specified in a "Letter of Intent." Its member countries primarily finance most IMF loans through payments of quotas.

Thus, the IMF's lending capacity is mainly determined by the total amount of quotas. Nevertheless, if necessary, the IMF may borrow from a number of its financially most robust member countries through the New Arrangements to Borrow (NAB) or the General Arrangements to Borrow (GAB) (http://www.imf.org/external/np/exr/facts/gabnab.htm) to supplement the resources from its quotas.

Technical Assistance:
The IMF provides technical assistance to help member countries strengthen their capacity to design and implement effective policies in four areas, namely, 1) monetary and financial policies, 2) fiscal policy and management, 3) statistics and 4) economic and financial legislation. In addition to technical assistance, the IMF also offers training courses and seminars to member countries at the IMF Institute in Washington D.C. and other regional training institutes (Austria, Brazil, China, India, Singapore, Tunisia and the United Arab Emirates).

Organizational Structure
The Board of Governors, comprising one governor from each member country(http://www.imf.org/external/np/sec/memdir/members.htm), is the highest decision-making body of the IMF. The Board of Governors usually meets once each year at the IMF/World Bank Annual Meetings. The International Monetary and Financial Committee (IMFC), consisting of 24 members, which reflects the composition of the IMF's Executive Board, acts as the advisor to the Board of Governors.

It meets twice each year to review issues relating to the Board of Governors' functions in supervising the management of the international monetary and financial system and make recommendations to the Board of Governors. The day-to-day work of the IMF, as guided by the IMFC, is carried out by the Executive Board (http://www.imf.org/external/np/sec/memdir/eds.htm) and IMF staff. The Managing Director is the Chairman of the Executive Board and Head of IMF staff.

Membership: IMF's members have grown from 29 at its inception in 1945 to 185. The latest member country is Montenegro, who joined the IMF in January 2007. Countries must first join the United Nations to be eligible for IMF membership.

Quotas: Upon joining the IMF, each member country is assigned an initial quota comparable to its relative economic size to the global economy and those of existing member countries (http://www.imf.org/external/np/sec/memdir/members.htm). Quotas are denominated in Special Drawing Rights (SDRs) 1/ General quota reviews are conducted at regular intervals – usually every five years, allowing the IMF to assess the adequacy of quotas in terms of members' needs for liquidity and its ability to finance those needs.

A member's quota determines its voting power and access to IMF financing. The quota largely determines a member's voting power in IMF decisions. Each IMF member has 250 basic votes plus one additional vote for each SDR 100,000 of quota. In general, a member can borrow up to 100 percent of its quota annually and 300 percent cumulatively.

The SDR was created as a supplementary international reserve asset in the Bretton Woods fixed exchange rate system context. The collapse of the Bretton Woods system in 1973 and the shift of major currencies to floating exchange rate regimes lessened the reliance on the SDR as a global reserve asset. Nonetheless, SDR allocations can play a role in providing liquidity and supplementing member countries' official reserves, as was the case amid the global financial crisis.

The SDR serves as the unit of account of the IMF and other international organisations.

The SDR is neither a currency nor a claim on the IMF. Instead, it is a potential claim on the freely usable currencies of IMF members. SDRs can be exchanged for these currencies.

A basket of currencies determines the value of the SDR.

SDR Value
The SDR value in terms of the U.S. dollar is determined daily based on the spot exchange rates observed at around noon London time, and is posted on the IMF website.

The SDR was initially defined as equivalent to 0.888671 grams of fine gold-which, at the time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system, the SDR was redefined as a basket of currencies.

Currencies included in the SDR basket have to meet two criteria: the export criterion and the freely usable criterion. A currency meets the export criterion if its issuer is an IMF member or a monetary union that includes IMF members and is also one of the top five world exporters. For a currency to be determined "freely usable" by the IMF, it has to be widely used to make payments for international transactions and widely traded in the principal exchange markets. Freely usable currencies can be used in Fund financial transactions.

The SDR basket is reviewed every five years, or earlier if warranted, to ensure that the basket reflects the relative importance of currencies in the world's trading and financial systems. The reviews cover the critical elements of the SDR valuation method, including criteria and indicators used in selecting SDR basket currencies and the initial currency weights used in determining the amounts (number of units) of each currency in the SDR basket.

The reviews are also used to assess the appropriateness of the financial instruments comprising the SDR interest rate (SDRi) basket (see below). The value of the SDR is determined daily based on market exchange rates. These currency amounts remain fixed over the five-year SDR valuation period, but the actual weights of currencies in the basket fluctuate as cross-exchange rates among the basket currencies move.

Concluded in November 2015, the Board decided that the Chinese renminbi (RMB) met the criteria for SDR basket inclusion. Following this decision, the Chinese RMB joined the US dollar, euro, Japanese yen, and British pound sterling in the SDR basket, effective October 1, 2016 and the three-month benchmark yield for China Treasury bonds was included in the SDRI basket.

During the 2015 review, the Board also approved a new formula-assigning equal shares to the currency issuer's exports and a composite financial indicator-to determine the weights of currencies in the SDR basket.

In March 2021, the Executive Board delayed the next review of the SDR valuation basket to July 31, 2022 effectively resetting the five-year cycle of SDR valuation reviews. With the next review to be completed by mid-2022, the new basket will become effective on August 1, 2022