UPSC Prelims 2016 · Question 40 of 98
UPSC Prelims 2016 question on International Monetary Financial Committee
- ExamUPSC CSE
- Year2016
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicExternal Sector of India
- DifficultyMedium
- TypeStatement
With reference to the International Monetary and Financial Committee (IMFC), consider the following statements:
1. IMFC discusses matters of concern affecting the global economy, and advises the International Monetary Fund (IMF) on the direction of its work.
2. The World Bank participates as observer in IMFC’s meetings.
Which of the statements given above is/are correct?
Show answer
Answer: C. Both 1 and 2
Verdict
The answer is both 1 and 2. The IMFC advises the Fund on the direction of its work, and the World Bank participates as an observer.
Analysis
Statement 1 is CORRECT. The International Monetary and Financial Committee advises and reports to the Fund's Board of Governors on supervision and management of the international monetary and financial system, and although it has no formal decision making power it has become the key instrument for giving strategic direction to the Fund's work and policies. Statement 2 is CORRECT. A number of international institutions, the World Bank among them, participate as observers at IMFC meetings.
Source
Press reporting on IMFC meetings and Fund material.
How to crack it
The Bretton Woods twins were created together and their governance is deliberately interlocked, so cross participation as observers is the expected arrangement rather than a surprise. Reason from institutional design: bodies dealing with overlapping mandates almost always sit in on each other's meetings. Then keep the distinction between advisory and decision making organs, since the IMFC advises while the Executive Board decides, and that separation is exactly what statement 1 is testing.