The potential economic effects of deleting three zeros from the Iraqi currency"

The potential economic effects of deleting three zeros from the Iraqi currency"





Under the slogan .. ((About monetary policy rational and irrational for the purpose of promoting the Iraqi economy)) The Faculty of Economy and Administration seminar entitled Iraqi .. "





News | 26-03-2013




The Faculty of Economy and Administration seminar entitled Iraqi .. "Economic impact potential to delete three zeroes from the Iraqi currency," the paper Dr. morning Tamimi about the deletion of zeros from the Iraqi currency and its impact on the Iraqi economy under the conditions of economic and financial pressure and monetary inflation that has befallen Iraq previously and led to negative effects on the regularity of the commercial market and labor markets and production and the level of living of the citizen, has generated distortions many in infrastructure and economic relations and among which was Seen block cash many zeros of little value and in a manner disproportionate to the future developments in the present Iraqi economy and its future, prompting the central bank to think and work on finding a solution to these conditions and offal, and this the reform of the management system solutions currency through restructuring and the deletion of zeros to control Tdfvq cash and cost management in an optimal manner.
- The monetary bloc exported (according to the latest statement to the Deputy Governor on 09/15/2012) more than (30) trillion Iraqi dinars to the various groups and reflected by the number of securities traded $ (4) trillion banknote. A product of a long period of inflation and economic decline, rising for example index of consumer prices Bassas year 1993 from (100) to (200000) in 2003, which means that the item being sold (100) dinars in 1993 became sold (b 200000) dinars ... And so on.
Under such conditions and the deterioration of the value of the currency category increased bulk of the currency (25) dinars (25,000) dinars. As is well known that runaway inflation during that period is the one who added three zeroes.
- This block large cash require commissioned large in counting and it takes time and effort and the properties of spatial and security and payments Cubs and salaries and Okiem transactions became fit with the country's need for a system cash management line and restructuring the real sector and price levels reached.
- Inflation led to a rise in currency in circulation (23) billion dinars in 1991 to about (30) trillion in 2012.
- Rise in GDP of Iraq (120) billion dollars at the end of 2011 to more than (300) billion dollars at the end of the year 2015 (forecast) will raise the money supply exported from (30) trillion dinars to about (70) trillion dinars a Masarf costs (8%) or more of GDP.
- There are great difficulties as a result of the presence of so critical mass, of these difficulties:
• the same difficulties of monetary operations.
• difficulty expressing monetary value.
• technical problems in the recording of statistical data and registration in the accounting books, and changing computer systems and settlement systems.
• the emergence of price figures long difficult sometimes even on the counters and digital appliances read Asfarha.
- The inflation in the country added over three decades zeros to the currency did not raise those zeros of the purchasing power of the largest class of currency is the 25,000 dinars, as equal to today about (20) dollars.
Steps to delete the zeros from the Iraqi currency
1. That the process of deletion quietly and after the establishment of the Iraqi banks educate citizens about the mechanisms of the deletion of zeros and holding seminars on the subject.
2. Legislation Act limits the phenomenon of financial and administrative corruption.
3. Tackle poverty and unemployment and migration.
4. Provide security capabilities to prevent counterfeiting of the new currency.
5. Continuation of the ration card system
6. Achieve economic and social stability and political and stay away from the quota system and provide qualified staff to manage the state.
7. The new currency must put up with the current currency with a gradual withdrawal from the market.
8. Withdraw the existing currency's current government banks and put large amounts of new currency in the market, and remains only in the possession of citizens for daily trading and can conduct transactions in both existing and new currencies.
9. Key action after the deletion of zeros is to keep the prices of goods and services.
Advantages deletion of zeros from the Iraqi currency first: the horizontal level: delete the three zeroes mean conversion (30) trillion dinars (30) billion dinars.
Second: the vertical plane: restructuring and currency composition means reductase (4) trillion banknote currently in circulation (2.[You must be registered and logged in to see this image.] billion and banknotes.
As the deletion of zeros lead to:
1. Facilitate the conduct of business transactions, and enhance the value of the Iraqi dinar and also will limit citizen's desire to deal and hold the dollar and dinar replaced.
2. Is strategically project that aims to reduce inflation by reducing the size of the currency market.
3. The liberation of the Iraqi economy restrictions.
4. Help to the widespread use of the currency and availability in large quantities in the market.
5. Possible transfer of coins from one place to another quite easily.
6. Increased recovery in the economic and financial situation of the country.
7. Facilitate the work of the Iraqi payments system and facilitate commercial transactions by issuing new classes suited to the increase in GDP.




April 4, 2013 at 2:36 AM Flag Quote & Reply



kaperoniModerator
Posts: 9381 The paper by Dr. Khalil al-Jubouri economic effects in the deletion of zeros from the Iraqi currency on the Iraqi economy has sparked announcement CBI intention to delete three zeros from the Iraqi dinar mixed reactions to the economic circles and the financial and popular in Iraq between supporters and opponents due to the fallout expected to move in markets, especially the zeroes which were added to the currency years ago inflated the money supply is likely chaos and confusion in the markets and banks in the absence of the conditions and capabilities required to implement such a decision and in this regard we will find in ندوتنا there a divergence of views also with related Borkta I'll Thread as follows:



First: - the experiences of other countries in the deletion of zeros from Amoladtha that the process of deletion of zeros known in several countries:
1. The experience of the European Union 2000-2002
2. Turkey's experience in 2005, where it was deleted (six zeros) of the old lira.
3. Romania's experience in 2005, omitted four zeros from its currency.
4. Experience of Sudan in 2007 removed two zeros from its currency.
5. Bolivia experience in 2008 has been deleted three zeros from its currency.
6. Zimbabwe experience of 2006, 2008, and has been deleted three zeros in 2006 and ten zeros in 2008.
7. Experience of Iran in 2011, has been deleted four zeros from its currency.



Second: - the expected economic impact of this Resolution
1. According to the experiences of countries that proceeded to hold the deletion of zeros, was the major cause of runaway inflation in the adoption, as happened in Argentina in 1985 and Bolivia in 1986 and Poland in 1989 and Yugoslavia in 1990. The fact is that Iraq does not suffer from the crisis, runaway inflation or excessive calls for such a move, as is the case in Turkey, which was forced to delete the (six) zeros from the Turkish lira to become a million pounds is equal to one lira.
As requiring scientific integrity and objectivity to point out the role of the Central Bank of Iraq who could succeed in two issues:
- ترصين cover of foreign currency.
- To control inflation and create more monetary stability as it does not exceed the rate of inflation is about 2%. According to a statement d. The appearance of Mohammed Salih, Deputy Governor of the Central Bank of the newspaper of the Patriotic Union of Kurdistan in 09/24/2012.
2. Good that the national interest and rationality require postponement of this topic because it expresses a form of economic luxury, and it will not result in any benefit to the Iraqi economy, but on the contrary will cause confusion Iraq in economic indispensable nowadays.
3. The process of deletion of zeros from the Iraqi dinar will not address the economic crisis afflicting the economy of Iraq unilaterally, which depends on oil, mainly, in the introduction to the aspects of this crisis low standard of living for the vast majority of the Iraqi people and rampant financial and administrative corruption in most aspects of the state and weak but The lack of industrial and agricultural production, as well as exacerbation of phenomena of poverty and unemployment and migration, in addition to the deteriorating security situation and poor services in addition to Takadiat regional and international economic and political so you must work to achieve the economic equation that proved correct it (the currency's strength comes from the strength of the economy) is not the number of units of foreign exchange equivalent , and the deletion of zeros unchanged if modified to change the colors and images or write currency.
4. For the purpose of raising the price of the Iraqi dinar exchange economically and financially, there is a series of measures and economic and financial measures can be taken in principle. It is true that way long, but lead to economic results positive are indicators monetary and trading a volume of cash reserves and the transfer of foreign debt and center balance of trade and balance of payments and budget and looks like inflation and the level of investment and the size of agricultural and industrial production intervention, monetary authorities and security conditions and exchange rates major currencies.
And there are traces of other economic are:
1 - money markets will be affected in turn in the case of deletion of zeros from the currency as reduced capital companies proportions zeros For example if the capital of a company three billion dinars will be three million dinars In this case we will be in front of the stage must where the market closed for a certain period for the issuance of certificates of new shares to bondholders with the number of shares remaining.
2 - that the process of deletion of zeros economic process difficult and complex and need to be accurate figures and statistics for all economic activities and that is not owned by Iraq at the present time.
3 - There is also great fear of the increasing numbers of counterfeit banknotes.
4 - may raise the level of fraud some mafias to do smuggling money abroad.
5 - In addition to the lack of belief that this step have an impact on the Iraqi economy, which it notes the status of full recession and lack of economic growth.
6 - in the case of implementation of the project may serve to increase inflation, because the reduction of the nominal value will increase the demand for goods and services and it is the psychological factor that generates monetary illusion. Transforms to increased demand, including that most of the goods imported in the Iraqi market Vsyazdad demand for foreign currency and, therefore, will cause an increase in prices. As a result of this illusion may get cash contrary to the feeling of the rich poverty at low nominal value for their money, causing deflation.
7 - does not have a real scale from which to measure the interest that can be achieved through the deletion of zeros from the Iraqi currency.
8 - Pope may be APOP financial corruption. By watching the reactions in economic circles, financial and popular for this step and found there opinions very optimistic and think that this operation will revert Iraq to the period of economic recovery in the seventies of the last century and will enhance the value of the Iraqi dinar to the IMF and the international community will address the economic problems, particularly inflation whilst others in the process to the value of the currency loss estimated one third, Fbtkadirhm hurt owners salaries and wages due to their access to enter their purchasing power is less than the nominal currency. These positions are based on shaky foundations and sometimes lacks economic logic seems clear there is confusion between the deletion of zeros and real improvement of the exchange rate, and a second mixing between this deletion and inflation, and a third mixing between this deletion and currency devaluation.
The former just wishful thinking is achievable through the deletion of zeros and the second mysterious as how to lead the deletion of zeros to the financial loss and on what basis identified one third?!, And the deletion will not address will not contribute to the aggravation.
The deletion of zeros psycho almost exclusively represented by a desire to currency exchange rate is high and this increase joy enters into the heart of the joy of the return of Iraqi dinar to its prosperous past. But this joy اتخفي convinced that the process of deletion of zeros does not mean anything economically.
Must work to convince Iraqis that the currency's strength comes from the strength of the economy to the security of many units of foreign currency equivalents, and in Japan there are leaves of a ten thousand yen, or about one hundred dollars and can not find the Japanese utility to delete the zeros from their currency until it reaches the yen to dollars.


Third: - the cost of the deletion of zeros until 1990 Iraqi dinar was printed in Britain, and the economic blockade 1990-2003 before the occupation within Iraq dinar printed by Dar Al-Nahrain printing which was established in 1979 and affiliated to the Central Bank of Iraq.
After printing occupation returned back to Britain handled by the company (Dallarro Dilaro). There are no official data on the cost of printing for the Iraqi monetary securities. But it is well known that the overall rate of the monetary cost of the paper in Britain 7 U.S. cents. Suffice permission to know the number of securities traded to give an idea of the total cost.
We did not find an official source in this regard, but a permit to Mr. Deputy Governor of the Central Bank saying that this number more than four trillion paper. I think something went wrong in this statement or to move and it seems that the correct number is four billion paper and thus become expensive to print and $ 289 million of this amount pointless compared to the financial situation of millions of Iraqis and represents more than a thousand tons of rice.
In the case of the direction of the central bank to replace the currency must take into account the following observations:
1. Develop printing Hometown: that the process of replacing the currency is not only a financial loss but also because of economic printing of currency outside Iraq, any This process Atsahm in operation Iraqi Atcod to increase the added value of the manufacturing industries. And on this basis has to be rehabilitation of Dar Al-Nahrain printing apparatus was stolen and burned documents after the occupation.
2. Awareness encourage the use of bank checks and advertising provide guidelines need to maintain the integrity of the banknotes and the introduction of electronic devices operating credit card to withdraw and deposit.
3. Economic feasibility study of the images wasting public money printed or minted cash classes, and found it in non-current, which requires withdrawn from the market and this actually happened in 2004 when it launched coins worth 25, 50, 100 dinars and then withdrew in 2008.
Recommendations of the seminar:
1. The process of deletion of zeros from the Iraqi currency is an important step for the purpose of getting rid of the money supply, which has become a big burden on monetary and trade dealings, but would prefer to postpone this step at the present time to the lack of objective conditions.
2. For the purpose of raising the exchange rate of the Iraqi dinar economically and financially, there is a series of measures and economic and financial measures can be taken, is as follows:
a. Activate all the industrial and agricultural sectors and tourism.
b. Provide services to citizens
c. Eliminate unemployment by creating job opportunities for the unemployed.
d. Give area for foreign investment which will contribute to raising the cash value of the Iraqi dinar.
e. Anti financial and administrative corruption.
f. Achieve security and stability.
g. Reconsider the wrong import of goods and reduced to the minimum necessary and not random import Open which led and still leads to the depletion of surplus hard currency.
h. Reconsider public expenditure and reduced state.
i. Not to import from abroad in case of availability of goods in the domestic market.
j. Product support and Iraqi agricultural crops and protection from competitive products and crops to neighboring countries and other countries.



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Interesting read , thanks for all your postings rocky :D

4. For the purpose of raising the price of the Iraqi dinar exchange
economically and financially, there is a series of measures and economic
and financial measures can be taken in principle. It is true that way
long, but lead to economic results positive are indicators monetary and
trading a volume of cash reserves and the transfer of foreign debt and
center balance of trade and balance of payments and budget and looks
like inflation and the level of investment and the size of agricultural
and industrial production intervention, monetary authorities and
security conditions and exchange rates major currencies.
And there are traces of other economic are:

This above plus this below for me and I am speculating, Spells at least a 1nid:1usd - 1nid- 2+usd, it can be even higher adding the commodities mentioned above like oil and agriculture meaning 1nid+ the sky is the only limit to usd. Please do not ask me to explain...

7. The new currency must put up with the current currency with a gradual withdrawal from the market.
8.
Withdraw the existing currency's current government banks and put large
amounts of new currency in the market, and remains only in the
possession of citizens for daily trading and can conduct transactions in
both existing and new currencies.
9. Key action after the deletion of zeros is to keep the prices of goods and services.
Advantages
deletion of zeros from the Iraqi currency first: the horizontal level:
delete the three zeroes mean conversion (30) trillion dinars (30)
billion dinars.

i'll take it. I'm not greedy, just needy!