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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

Many Topics Including The Oldest Dinar Community. Copyright © 2006-2020


    Renting money in unregulated markets: Iraq is a model

    Rocky
    Rocky
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    • Post n°1

    Renting money in unregulated markets: Iraq is a model Empty Renting money in unregulated markets: Iraq is a model

    Post by Rocky Thu 20 Dec 2018, 6:50 am

    [size=30]Renting money in unregulated markets: Iraq is a model[/size]
    December 18, 2018 
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    [size=13]Appearance of Mohammed Saleh    [/size]
    It is clear that there are two cash markets working in their behavior and directions on different monetary terms and conditions and according to the rule of mutual mutual exclusion. They are interconnected markets but do not match goals and vision. The cash-flow phenomenon, in which the speed of circulation of highly concentrated cash flows increases, is a source of excess demand on the central bank's foreign reserves, which means sacrificing one of these reserves to counteract an active liquidity that was inert or choked. ). Here, monetary policy pays an added price to stability, which was triggered by interest rate shocks in the money market, in order to maintain exchange rate stability and counter the devaluation of the foreign dinar. The sacrifice of foreign reserves as a result of surpluses of local liquidity and sudden shocks to currency-triggering factors is a risk premium and additional costs to monetary policy.
    Based on the above, the monetary policy of the central bank to maintain the stability of the general level of prices and reduce inflation using foreign currency as a means of defense or stabilizer nominal nominal anchor in the stability of the external value of the dinar, does not generate (in the presence of two cash markets) only cases of costs and additional charges On foreign reserves, which are inversely proportional to the rise in short-term nominal interest rates in the unregulated cash market (ie, cash leases). In the low general price level (by defending a stable exchange rate of the dinar), the unregulated cash market indicates that the real effective interest rate is the nominal interest rate on the regulated market minus the difference between the exchange rates of the dinar between the regulated and unregulated markets.
    Conclusions
    The monetary conditions in the market are conservative conditions of maintaining the stability of the Iraqi dinar exchange rate (although the current account deficit of the balance of payments), which is followed by the stability of interest rates in the organized market, including the monetary policy interest rate (which reflects the interest rate) Real positive about 6% per annum), which are matched by different monetary conditions in the unregulated market. On the contrary, an excessive rise in real short-term interest rates in the unregulated or illegal cash market is as high as 15% per month (representing the rate of return) Of the The exchange rate of each dinar is achieved by the parallel exchange markets, ie, resulting from the exchange rate differentials of the dinar in the exchange markets, in addition to the monetary policy interest rate in most cases. Therefore, if the monetary policy to modify the interest rate and pointed upwards in order to attract excess liquidity and sharpened from the unregulated cash markets as an alternative to the flow towards the central monetary window, this does not mean in the light of the phenomenon of inflationary prevailing only economic contraction of the real activity and in order to overcome the conditions Monetary conditions for the unregulated or informal market. If monetary policy is to sacrifice the exchange rate and stabilize it towards devaluation of the dinar and create inflationary waves, the local currency rental market will feed inflation by maintaining a positive real interest rate that is constantly generated by inflationary expectations that ultimately maximizes the cost of managing monetary policy and drains reserves Hotfile. Therefore, there is no alternative but to promote medium-term hybrid financial instruments (3 years) as central bank bonds that are to be bought through the cash market with balance-sheet interest and repayable at maturity in foreign currency and at a cash exchange rate as an alternative to cash liquidity (whenever possible).Such financial instruments and instruments are instruments of assistance that enable the imposition of behavior that is a state of consistency in the monetary conditions between the two markets (the organized money market and the unregulated market). Ie the impact on the monetary behavior of unregulated markets and their penetration of the official financial instruments hybrid and the growing market of the rental currency and its monetary conditions harmful to the cost of managing monetary policy. With this monetary consensus between the regulated and unorganized markets, monetary policy objectives are achieved in controlling excess liquidity levels and generating stable price expectations without additional costs borne by the monetary authority.
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