The IMF currency reserve units are called Special Drawing Rights (SDRs); from 1974 to 1980 the value of SDRs was based on the currencies of 16 leading trading nations. Since 1980 it has been reevaluated every five years and based on the relative international economic importance of the British pound sterling, the European Union euro (formerly the French franc and German mark), the Japanese yen, and the U.S. Dollar." (2010, p.1). All these roles make it one of the most important player in the global financial market. Criticism in the wake of the current global financial crisis

The IMF has been criticized for its role through most of the major financial crises that have taken place in history. One such example is the Asian financial crisis of 1998 when the fund required the Asian countries to keep the interest rates at extremely high levels. Also, the IMF provided loans to developing countries to the tune of $100 billion and this exacerbated the crisis.

"Considerable concern has been expressed about the prolonged use made of International Monetary Fund (IMF) resources by a number of member countries. Some commentators have seen this as being fundamentally at odds with the role of the IMF as a source of temporary balance of payments support and as one aspect of mission creep by the Fund." (Bird, 2004. p. 1). This prolonged presence within a country's economy is viewed as detrimental for the development of the economy, thereby negating the positive impact of its role in the financial aspect of the country.

Many economists argue that the current economic crisis could have been avoided if the IMF had paid closer attention to what was happening in the U.S. housing market. Its role is to act as a watchdog of economies and it is thought that the IMF has failed in this role. Another side of looking at this argument is that the IMF simply oversees economies with...

It does not pay close attention to every event that happens with an economy. When the Government failed to see it coming, it is a futile attempt to blame the IMF.
There are other scenarios also to show that the IMF has to change its focus. "The IMF's recent emphasis on imposing major structural and institutional reforms as opposed to focusing on balance of payments adjustments will have adverse consequences in both the short-term as well as the more distant future. The IMF should stick to its traditional task of helping countries cope with temporary shortages of foreign exchange and with more sustained trade deficits" (Feldstein, 1998, p.1).

These ideas show that IMF has to make some structural changes to keep pace with the changing face of globalization. This will make it a more effective player and will help it to play a wider role in the financial world.

References

No author. (July 1st, 2010). International Monetary Fund. Columbia Electronic Encyclopedia, 6th edition, p.1

Graham, Bird. (Aug 2004). The IMF Forever: An Analysis of the Prolonged Use of Fund Resources. Journal of Development Studies. Vol 40(6) p 30-58.

International Monetary Fund. (no date). Retrieved from http://www.imf.org

Truman, Edwin. (2006). A strategy for IMF Reform. Publisher: Peterson Institute.

Feldstein, Martin. (April-May 1998). Refocusing the IMF. Council on Foreign Relations. Vol 77(2), pp 20-33.

International Monetary Fund. (2002). International Monetary Fund. Publisher: International Monetary Fund

IMF. (June 2009). Factsheet -- the IMF at a glance. Retrieved from http://www.imf.org/external/np/exr/facts/glance.htm .

Ferdous, Azim. (May 2008). History of International Monetary System. Retrieved from: www.scribd.com.