The Annual Testimony of the Secretary of the Treasury on the State of the... (EventID=117506)

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On Tuesday, July 9, 2024, at 10:00 a.m. (ET) full Committee Chairman McHenry and Ranking Member Waters will host a hearing entitled, “The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System."
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Witness for this one-panel hearing will be:
• The Honorable Janet L. Yellen, Secretary of the Treasury
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Background
The Secretary of the Treasury is required by law to testify each year before the Financial Services Committee on the international financial system, with a particular focus on the following four areas:
1) progress made in reforming the International Monetary Fund (IMF);
2) the status of efforts to reform the international financial system;
3) the compliance of countries that have received assistance from the IMF with agreements they entered into as a condition for receiving IMF assistance; and
4) the status of implementation of international anti-money laundering and counterterrorist financing standards by the IMF, the multilateral development banks, and other multilateral financial policymaking bodies.
Origins and Operations of the IMF
The International Monetary Fund’s (IMF’s) primary mission is to promote international macroeconomic stability. The IMF traces its roots to a July 1944 meeting at Bretton Woods, New Hampshire, where representatives from 45 nations gathered to discuss the postwar recovery of Europe. The discussions included the creation of international institutions to resolve some of the problems-such as protectionist trade policies and unstable exchange rates-that hobbled the international economy between the two world wars. Two other international organizations also trace their origins to the Bretton Woods conference: the World Bank and the World Trade Organization. The World Bank’s mission is to reduce poverty and facilitate economic development. The World Trade Organization seeks to liberalize international trade and oversees the rules governing the international trade system. The IMF came into formal existence in 1945 and has grown to near-global membership of 190 countries today.
Like the global financial system, the IMF has evolved during its seven decades. Until the early 1970s, the IMF’s primary purpose was to manage the system of fixed exchange rates agreed to at Bretton Woods. The U.S. dollar was initially fixed to gold at $35 per ounce. All other member countries’ currencies were fixed to the dollar at different rates. The IMF monitored the macroeconomic and exchange rate policies of its member countries and helped them weather economic crises by providing them with short-term loans. This global system of fixed exchange rates was disrupted in 1973 when the United States went off the gold standard. After a period of instability, the modern system of floating exchange rates came into effect. The IMF adapted to the new system of floating exchange rates by promoting stable exchange rates and continued to provide temporary financing to countries affected by economic crises.
The IMF’s current operations can be grouped into three categories: surveillance, lending, and technical assistance:
• Surveillance: The IMF monitors the economic and financial policies of its member countries to identify possible risks to financial stability and offer advice on policy adjustments.
• Lending: The IMF lends to countries facing balance-of-payments problems, which generally means they are having trouble paying for imports or servicing their debt. The IMF provides temporary financial assistance to help these countries stabilize their economies while implementing economic reforms. The IMF disburses its loans in phases (“tranches”) after verifying that specified economic conditions and reforms have been met (“conditionality”).
• Technical Assistance: The IMF provides technical assistance and training to help its member countries strengthen their capacity to design and implement effective policies. The IMF providestechnical assistance in monetary and financial policies; fiscal policy and management; statistical data compilation; and economic and financial legislation. A small but important component of technical assistance also targets countries’ ability to combat money laundering and terrorism financing.
U.S. policy at the IMF is made by the Executive Branch and Congress. Within the Executive Branch, the Treasury Department has primary responsibility for managing U.S. participation in the IMF. The President appoints U.S. representatives to the IMF Board of Governors and IMF Board of Executive Directors...
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