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Monday 26 August 2019
There have been recent parliamentary voices calling for the reintroduction of coins (coinage) and reintroduction into circulation, as well as reconsideration of the project to delete the three zeros from the Iraqi currency, at a time when economists regarded it as part of the great economic reform process in the country.
Economist Dr. Essam Mohamed Hassan said that "the Central Bank decided earlier to develop a plan to create coins as part of a restructuring plan that requires the approval of the House of Representatives as a strategic plan will contribute to support the value of the Iraqi dinar in trading
"The change of currency means that a new currency replaces an old currency, with a specified replacement rate, and removes the zeros of the old currency or moves the decimal places to the left," he said, adding that "part of the restructuring plan of the currency and banks involves the creation of coins for trading." Financial support for the national economy. "
Hassan said that "the coin project, launched in 2004 did not succeed because of the absence of comprehensive economic reforms to support the financial value of the dinar in the global market," explaining that the coins will be one of the important intermediate currencies that will be used for trading and transactions.
"Deleting zeros and reintroducing coins has to do with economic reforms because coins, because of their durability, are longer than coins that are quickly damaged," he said. In 2004, "indicating that this requires the dissemination of a culture to educate the public about the economic feasibility of the minted currency."
Delete the zeros
Dr. Abdul Hussein Al-Ghalbi, an economist at the Faculty of Business and Economics, University of Kufa, said: "The process of changing the currency is not limited to deleting zeros, but it can be done by adding a number of zeros or moving the decimal places to the right, as happened in South Africa in 1961, but the situation Prevailing over the past 50 years in most countries is the elimination of zeros because of the hyperinflation witnessed by many countries, which obliges to add zeros to their currencies in those circumstances, and then get rid of zeros at the end
Al-Ghalbi stressed that "changing the currency does not affect productivity, as well as that this change does not affect the purchasing power of money, because the power comes from the increased demand for money against the money supply, and as long as the purchasing power does not change, the demand for currency and money supply They do not change, because deleting zeros does not entitle monetary institutions and the central bank to print more money and pump it into
Al-Ghalbi added that "the central bank is constrained by the existing cash in the replacement process, while foreign trade will not be affected as the price of exports will continue itself unchanged, as well as import payments are not affected because foreign exchange is in foreign currency against domestic, which remains unchanged because The purchasing power of a currency
do not change".
"Changing currency and deleting zeros brings multiple benefits, including the fact that changing the currency leads to more efficiency for the local currency by reducing the number of zeros," he said.
He said that "after the change of currency will occur a serious reduction in the volume of transactions with less amount of money, which facilitates all parties to deal with, especially
Al-Ghalbi said that "currency change reduces the phenomenon of monetary deception experienced by the people with a large number of zeros that push towards the generation of inflationary pressures, and the currency change signals to the local community and international markets that the government is serious in removing inflation, and the economy is heading towards a new beginning empty Of inflation
He added that "currency change leads to greater confidence in local currency and credibility, and when there are a large number of zeros in the local currency people lose their confidence, especially those with transactions in wholesale markets and importers, as they will replace the local currency with stable international currencies such as the dollar or the euro, which deepens The phenomenon of dollarization in the domestic economy, which weakens monetary authority and reduces the effectiveness of policy
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