Those supporting this view, however, also argue that the IMF has lost sight of its original goal and ventured into new areas that might be best left for others to address. Debates have repeatedly occurred in the halls of the U.S. Congress relative to the United States' continued financial support of the IMF. These debates center on the fact that the IMF has ceased to exist as an organization whose function was to finance temporary balance of payment problems and transcended into an organization whose principal function is to provide "microeconomic bailouts that restore the solvency of clearly insolvent financial institutions" (Calomiris, 1998). In a similar vein, critics argue that the IMF is providing assistance to countries and commercial interests within those countries tha are imprudent and exposing U.S. funds to unnecessary and dangerous risks. These critics argue that the IMF operates largely in secret and that the American taxpayers who are largely providing bailouts for other nations throughout the world have no say in the conditions under which these bailouts are occurring. Those individuals offering these criticisms argue that the IMF should adopt more transparent lending policies that allow the nations providing the bulk of the financial support the opportunity to understand and object, if necessary, to the loans being offered nations that have little or no chance of paying back the loans.

A third group of critics relative to the IMF comes from the nations most dependent on the IMF for financial support. This group would be the developing nations of the world who find themselves having to approach the IMF for loans. These nations argue that the IMF uses a heavy handed approach relative to not only the granting of loans but also as the conditions attached to those loans. The governmental officials and business leaders in these countries complain that the IMF is inflexible and slow to provide debt relief and that its policies contribute to the poverty found in many nations (Bandow, 1993).

Like all large organizations, the IMF has critics on all sides (Global Exchange, 2007). The examples offered are only the tip of the iceberg but are representative of the viewpoints expressed by the various groups affected by the IMF. Quite simply, the IMF is facing a potential crisis that might threaten its very existence. The IMF has creditibility problems across the board and must begin to face these problems (Bucharest Herald, 2011). The legitimacy of its policies, its effectiveness in handling financial crises, and its loan strategy are all under attack. Despite the IMF's increased role in granting loans and other financial assistance to recipient countries, these loans have too often not resulted in recovery or growth, but rather, they have resulted in economic stagnation or worse. The result has been dissatisfaction by the recipient nations and outrage by the countries providing the bulk of the support for these loans.

Althought it has already been stated, the fact that the IMF has ventured so far away from its original purpose cannot be stated enough. The original function of the IMF was to provide stabilization and this stabilization was dependent on the strength and dependability of the U.S. dollar. This system worked effectively for nearly thirty years but it all ended with the Smithsonian Agreement. The Smithsonian Agreement ushered in the era of floating exchange rates that the world uses today and it brought with it financial deregulation and a liberalism that has fueled financial speculation activity and currency instability. In the process, the role of the IMF in maintaining a stable financial network has been lost.

In order for the IMF to regain the respect of the international community it needs to work itself back toward its original goal of providing stability to the financial markets. This requires that the IMF work to begin stronger regulation of capital flows and markets and to establish a stable system of exchange rates. This goal is particularly difficult in light of the fact that there are so many developing nations whose currency borders on being worthless but in order for the world's major currencies to remain stable these lesser currencies must be afforded some measure of stability as well. This was the original role of the IMF and it must direct its attention in this direction again.

The IMF's track record in managing financial crises as they develop throughout the world has not been good. The policies utilized by the IMF place debtor nations in a weakened...

The debtor nations are unsophisticated and lack the capacity to organize themselves against the creditor nations who possess the benefit from their experience and ability to organize among themselves. As a result, debtor nations find themselves being forced to pay high interest rates and being made to suffer from unreasonable demands in exchange for procuring loans. What is needed is a fair system where loan repayment disputes and loan forgiveness programs can be arbitrated where debtors and creditors can negotiate on a somewhat level playing field. At the present time, the IMF is viewed by most debtor nations as a partner with the creditor nations. A condition that undermines the actual position of the IMF and one that is counter-productive to economic stability in the debtor nations.
The IMF must work diligently to increase its level of expertise in many of the areas that it is presently offering advice. In recent crises such as those that occurred in Malaysia and other parts of Asia, information after the fact established that the IMF may have incorrectly advised the principles relative to several factors that contributed to the events there. The IMF managing director admitted that the his staff failed to adequately understand the capital markets involved in the crisis and that they provided incorrect information to the involved nations when they asked for assistance on the issue. For an agency that is supposed to be a source of expertise on such matters an admission of this nature is remarkable and indicative of the changes that the IMF must make.

The financial world in 1944 was much different than the one that exists today. In 1944, there was much less international trade than there is today. Most nations operated as a microcosm and most trade occurred internally. Balance of trade, currency exchange rates, international loans, institutional bailouts were not major issues. Against this simplier background, the IMF worked marvelously. Only 44 members belonged to the original IMF and the IMF concerned itself with one basic issue: stabilizing the world's currency. Since that date, however, the situation facing the IMF and the international marketplace has become far more complex.

The operation of the IMF has become far more complex. The IMF's role in maintaining currency stabilization has been essentially abandoned as the world has adopted a flexible system of currency stabilization. Instead, the IMF has ventured far beyond this simple responsibility and attempted to establish itself as the world's guardian in all matters involved in the financial world. The IMF is now a loan center for countries in need of financing trade inbalances, facing severe drops in currency exchange rates, and any other temporary financial crisis. In addition, the IMF has opened its doors to countries seeking advice regarding financial, monetary, or fiscal policy. The willingness of the IMF to enter these arenas has caused it to broaden the size of its organization and for it to widen the scope of its influence in the commercial markets. Many question the wisdom of this move and the success of the organization in doing so effectively.

Globalization has impacted the operation of the IMF severely. Instead of an organization of 44 members, the present organization now consists of 185 members. Many of the newest members of the IMF are in the early stages of their economic development and in need of the IMF's services. This places a strain on the organization and increases the need for additional funding. This additional funding must come from somewhere and it falls upon the shoulders of the developed, westernized nations to provide the funding. Unfortunately, as the IMF is presently organized this additional funding serves to increase the power and influence of these developed nations and the nations in need of assistance find themselves facing an ever increasing mountain of debt. With this debt comes other conditions that make economic progress and political autonomony more difficult. The IMF as the intermediary finds itself caught in the cross-fire. In an attempt to help, it becomes identified with the larger, more financially stable nations and viewed suspiciously by the very nations they are trying to assist.

Critics of the IMF can be found on both sides of the fence. The developed countries believe that IMF is too lenient in granting loans to the developing countries while the developing countries feel that the IMF places too many restrictions on the loans. In many…