Relationship: The dependence of some governments on the central bank for financing threatens monetary stability
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Baghdad today - Sulaymaniyah
Today, Thursday, the Governor of the Central Bank of Iraq, Ali Al-Alaq, affirmed the bank's intention to take the necessary legal steps to make the dinar a major currency prevailing in the market, indicating that this is in cooperation with the government.
Al-Alaq said during a speech at the Sulaymaniyah Forum, which was followed by (Baghdad Today), that "monetary policy includes two basic goals: maintaining the general level of prices, that is, the strength of the currency locally, and the exchange rate, which represents the strength of the currency externally."
He added, "The phenomenon of relying on the central bank to cover the deficit of the state's general budget is a very dangerous phenomenon, and the dependence of some governments on the central bank for financing threatens monetary stability," noting that "buying and selling foreign currency is strange and a widespread phenomenon in the Iraqi markets, which is (market dollarization). ).
He continued, "Externally, we do not have a problem with remittances, and every day we open new outlets to sell the dollar at the official rate," noting that "the currency is a symbol of sovereignty and a title for the country, and abandoning it is tantamount to lowering the flag."
And Al-Alaq explained that “inflation and the exchange rate are high with factors, and we notice a growth in the money supply, and the currency export witnessed a storm, which is an abnormal growth in the absence of productive growth and indicates an increase in import demand,” stressing that “the central bank law stipulates that it sells foreign currency without placing Restrictions, and the text of the phrase in the article is (simple unconditional sale), which is the ideal case through which the central bank can maintain the exchange rate, that is, respond to every demand for the dollar.
And he continued: “The problem is that there are more controls and standards in verifying the buying and selling of foreign currency, and with the increase in the international currency war, it makes the process of putting more controls and restrictions increasing, and the central bank has become in a complex balancing process between achieving the simple unconditional sale so as not to make there There is room for price difference and speculation and the application of these standards, which require a review of all operations.
And he stressed, "Unfortunately, the central bank bears additional burdens in applying these standards due to the absence of the role of other institutions that are supposed to help in the process of verifying operations. Knowledge of the foreign dollar and its conformity in these operations.. There are large gaps in the border crossings, some of which have been diagnosed for many years, and some of which are new with experience.
Al-Alaq stressed that "the central bank has the ability and desire to achieve its goal of responding to the dollar's demand, whatever its size, and it is now able to offer the dollar at the level of demand; but what reduces this supply is a group of merchants and others, who are not ready to enter into these processes and controls." .
He explained, "Therefore, there is a shortage in the process of covering the demand, if we see that the existing rates of remittances and the demand for dollars and credits, as they cover only a small percentage of the real trade of Iraq, and we are trying to bridge this gap through various means to earn these and their entry into the process from its correct gate."
It is noteworthy that the 7th Sulaymaniyah International Forum is being held under the title "After 20 Years: Iraq and the Region in the Midst of New Global Challenges," and the forum, according to a statement issued by its management, is "a high-level political conference focusing on the Middle East and North Africa and hosted by the Institute of Regional and International Studies (IRIS) in The American University in Iraq - Sulaymaniyah.
The seventh edition of the Sulaymaniyah Forum discusses topics of politics, economy, environment, law, human rights, health, energy and many issues. During the two days of the forum, thinkers, experts and decision-makers from the region and the world will meet to discuss the most important regional issues in the world and present current views and points of contention. The statement of the management of the forum, which said that the forum Sulaymaniyah seeks to translate ideas and discussions into concrete actions and policies that can make a difference in people's lives.