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  • On June 30th, 2015, Greece missed a major loan-repayment deadline to the International

  • Monetary Fund. The IMF provided 32 Billion Euros in emergency loans to keep the Greek

  • economy from collapsing. So why did the IMF take a risk on such an unstable economy? What

  • exactly is the IMF?

  • The IMF was created alongside the World Bank in 1945, as overlapping finance arms of the

  • United Nations. The World Bank focuses on financing and investing in developing countries,

  • as well as eliminating poverty. The IMF primarily monitors exchange rates, stabilizes international

  • monetary systems and fosters global financial cooperation.

  • Well since World War 2, the world’s economies have become interdependent on each other through

  • trade and investment. While this helps strengthen the global financial system, it also creates

  • weaknesses in the economic chain. When an unforeseeable crisis, like a recession or

  • a natural disaster, destabilizes one nation’s economy, it can severely affect dependent

  • countries. The balancing force of the IMF prevents any potentialdomino effect

  • in collapsing economies.

  • The IMF is one of several global banks that provides loans to troubled economies to promote

  • a stable WORLD economy. The IMF, and its sister organisation, the World Bank, tend to serve

  • more Western interests, like the US and the EU. While other global banks, like the New

  • Development Bank and the Asian Infrastructure Investment Bank serve Chinese and Russian

  • interests more. In total, the IMF has 188 member states.

  • After the global financial crisis of 2008, African countries were hit hard. The demand

  • for imported goods from Africa declined, and international growth rates slowed. In response,

  • the IMF proactively made billions of dollars available to places like Ghana, at extremely

  • low interest rates. With this support, Ghana’s growth rate increased to over 9% in 2011,

  • and remains one of Africa’s frontier emerging markets.

  • Currently, the IMF’s biggest borrowers are Portugal, Greece, Ireland and Ukraine. The

  • IMF also givesprecautionaryloans as a sort of preventative measure before things

  • get too bad. Receivers of precautionary loans include: Mexico, Poland, Colombia and Morocco.

  • Despite their support, the IMF has been widely criticized for allowing disparate levels of

  • influence. This is because member nations which invest more money in the IMF get more

  • voting rights. The US comprises nearly a fifth of all available votes because they are the

  • largest contributor. Additionally, since the IMF is somewhat of a last resort, countries

  • in trouble have no choice but to agree to significant austerity measures that may not

  • necessarily be in their best interests, or agree with their ideologies.

  • While the IMF is a powerful force within the world economic balance, it also openly serves

  • the interests of its member countries. With so much influence in the political policies

  • of struggling countries, it is dangerous to try and treat domestic problems with simple

  • cash infusions and austerity measures. However, without it, countries like Greece may face

  • worse alternatives. If Greece leaves the eurozone over money woes, it would be devastating to

  • all of Europe.

  • The European Union is also at risk after Greece’s refusal to accept a bailout. To learn more

  • about the future of the EU, check out our video now. And subscribe for new videos every

  • day. Thanks for watching.

On June 30th, 2015, Greece missed a major loan-repayment deadline to the International

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