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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


    Tool absent from the actions of the Central Bank of Iraq

    Proven
    Proven
    Proven
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    Posts : 1858
    Join date : 2012-12-21
    • Post n°1

    Tool absent from the actions of the Central Bank of Iraq Empty Tool absent from the actions of the Central Bank of Iraq

    Post by Proven Sat 23 Feb 2013, 10:02 pm

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    Hamid Rahim al-Rubaie
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    Posted 23/02/2013 05:22 PM

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    This
    tool is one of the important means (if not more important) than among
    other tools (the discount rate, the legal reserve) used by central banks
    to control the money supply for free economies ..     The
    main open market operations the process of buying and selling
    government bonds (public debt), ie the State to borrow from the public
    or the banks against a specific repayment period and interest rate.     The
    resort's central bank if he wants to make a change in the size of the
    monetary bloc who shall underwriting process (bonds) and thus are
    withdrawing some of the liquidity if they wanted a reduction in mass
    cash and buys these bonds if they wanted to pump cash into the economy.
    The
    important this means that it has a double effect, it is by dealing with
    the phenomenon of the continuing rise prices (inflation) or give a
    boost operational for the economy in recession, the other hand is an
    effective way to finance the deficit in the public budget without
    getting any unwanted side effects by Taxes as a means of financing the
    deficit may have a deflationary impact on the economy as a cause weaker
    purchasing power per capita and higher costs for projects, and this is
    reflected negatively on the volume of demand.     The
    new version of cash method to finance the budget deficit, he may
    inflationary effects, while open market operations is only the process
    of transfer of liquidity from the other hand to hand without any
    increase or decrease or side effects, so the movement of liquidity here
    free movement involuntarily often subject Standards differentiation
    economic for individuals and banks between buying bonds or sold and
    between other economic activity, and this feature is missing her taxes,
    they are forced to impose on the individual or project without the other
    option is payment, hence be taxed impact deflationary although It is
    the process of transferring liquid from one hand to the other as well.
    As
    for the Iraqi scene With all efforts by the Central Bank under the
    successful management since 2003, which focused on maintaining
    fluctuations minor allowed in the exchange rate through the method of
    (floating orbit to determine the exchange rate) and succeeded in doing
    so through the currency auction and the continuing rise in size currency
    reserves, but as a result of failure of the banking sector and the
    weakness of dealing between them and the public made ​​it (the discount
    rate and the legal reserve) means is effective to control the money
    supply, not to mention the policy actions of the state financial and
    based on the allocation of the bulk of the budget of the consumer
    spending that left significant problems including:
    1
    - sheer size of the money supply that reaches, according to the annual
    statistical bulletin of the Central Bank for the year 2011, to
    (51,743,489 trillion Iraqi dinars).
    2 - atrophy of the productive sector with political factors Born major weakness in investment opportunities.
    3
    - Lack of investment opportunities with the social values ​​of Iraqi
    society led to the rise in the marginal propensity to consume for the
    increase in income.
    4 - rising consumption means an increase in import multiplier and thus more leakage of hard currency abroad.
    Hence the central bank should resort to a method (open market) and for the following reasons:
    A - It does not require a device banker ahead, but you need to market financial although not a high-tech
    B
    - The Iraqi individual inclined to deal with confidence with the state
    because of social factors and the weakness of the private sector.
    C - the possibility of issuing bonds at low interest rates.
    Here,
    open market operations will have impact in reducing consumption Kamali
    and reducing leakage of hard currency in addition to the recovery of the
    financial market, and impact other important is the possibility to rely
    on bonds to finance the budget deficit and keeping government requests
    continuing to withdraw currency reserves in the Central Bank to finance
    deficits in the the general budget, even in the absence of a deficit in
    the public budget can customize aspects of investment spending to
    revenues.
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