bumped ~
Iraqi Currency Redenomination and Exchangeability
There have been a tremendous number of inquiries about the recent news that Iraq will be increasing the value of their currency and, at the same time, introduce new denominations into the Iraqi economy sometime in 2010 (currently planned).
Specifically, it has been reported that the Iraq Finance Minister issued a statement saying they have prepared a plan to increase the value of the dinar against the dollar and will introduce 25, 10, 5, 1, 1/2, ¼, and smaller (possibly 1/10 or 1/20) dinar banknotes and/or coins. He said that successful fiscal policies pursued in Iraq have contributed to increasing the value of the Iraqi dinar against the dollar, noting that the U.S. Dollar dropped significantly in value during the current year. Of note, he also said in a press statement that the bank has been following with great interest the phenomenon of low demand for the U.S. Dollar in the local Iraqi currency exchange markets.
Mudhhir Muhammad Salih, a member of a Central Bank advisory panel, said by the end of 2010, new banknotes will be fully introduced while the current banknotes will be gradually removed from circulation. He did not specify when the new banknotes would be issued. Both (current and new) denominations will be legal tender in Iraq until the current banknotes are completely withdrawn over a period of time.
Economic analyst Hilal al-Tahhan was quoted as saying “the bank's move is overdue.” He said he expects the currency change to go smoothly because of the decision to allow both the current and new banknotes to coexist during an extended exchange period, leading to less turbulence in the economy.
What does all this mean? Overall, this news appears to be very positive and possibly points to some significant changes in the value of the Iraqi Dinar. It has long been the opinion of many Iraqi Dinar investors that the Iraqi Government must introduce new lower denominations into their economy before the value of their currency increases. If the value (buying power) of the dinar increases significantly or rapidly, the larger denominations currently in circulation would be impractical for use during everyday transactions in the Iraqi economy.
If the Iraqi Dinar increased in value to 10 cents (.1 USD), the smallest banknote in Iraq would have a value of $5 USD. There would no practical way to purchase everyday items in the economy and no way to make change---the currency would be impractical and unusable. If a soda in Iraq has a value of 50 cents now, it will still have a value of 50 cents if the value of the dinar increases---there has to be a denomination in the Iraq economy to pay for it. The current problem is that Iraq doesn’t have any currency in circulation to pay for normal day-to-day products if the dinar rises significantly in value---Iraq must have smaller denominations moving forward.
Also from the recent news, it appears as though all denominations (current and soon to be issued) will be in circulation at the same time and no immediate exchange will be necessary. Hopefully, theIraqi Dinar will be on the world exchange market soon to allow for even easier exchange in the near future. Expectations are that Iraq is moving as fast as they can to rebuild their economy and wealth, and join the international economic community.
There have also been rumors about the future exchangeable value of some current Iraqi banknote denominations, and limited time periods for exchange of current Iraqi banknotes. It has been falsely rumored that perhaps the 25,000 dinar banknote will be exchanged at a different exchange rate than current smaller Iraqi banknotes.
Another false rumor suggests there will be a very short period (days or weeks) of exchange for the current Iraqi banknotes after a significant change of value and introduction of lower denominations .
Well, to address these rumors, let’s look at currency from a basic level: Countries issue their own currency. They issue their currency with a responsibility to honor it and redeem it. The currency must be accounted for. When a country issues currency (the US as an example), they borrow against the currency and issue debt to support it. The US recently printed a significant amount of currency in order to finance stimulus funding. In order to do this, the US government had to borrow the money with an obligation to pay it back.
One of the main functions of the US Treasury Department is to manage the U.S. national debt (the amount of money which the federal government owes to its creditors). China owns much of our debt as do US citizens and other countries---we must honor our issued currency and our debt. If a country doesn’t honor its debt, creditors (other countries and investors) lose faith in the defaulting country and a country will end up in financial ruins. Iraq, as a responsible member of the world economic community with a goal of getting their currency online with the rest of the world currencies, has issued currency with an obligation to honor it----all of it---not just certaindenominations.
Throughout modern history, I can't think of one instance where a country honored some denominations , but not others---it doesn't make sense---people and other countries would lose faith in that country's responsibility to respect their debt and honor their issued currency---who would trade with them, exchange with them, or conduct business with them? To limit the time period for currency exchange in order to force the de-valuation of currency in circulation in order to reduce debt doesn't happen and wouldn't be tolerated by the world financial community.
Countries have to be accountable for all of their currency and they can't play games with exchange timelines to try and prevent people for exchanging. Remember, in addition to individual investors, large governments and banks outside of Iraq hold Iraqi currency. Money from all over the world has flowed into Iraq through the purchase ofIraqi Dinar . The Iraqi Government will honor that investment in their economy, or there will never be faith in their economy and they will never be accepted by the world financial community.
http://www.dinarbanker.com/information-articles/iraqi-dinar-redenomination-and-exchangeability.html
Related articles~
Iraqi Currency Redenomination and Exchangeability
There have been a tremendous number of inquiries about the recent news that Iraq will be increasing the value of their currency and, at the same time, introduce new denominations into the Iraqi economy sometime in 2010 (currently planned).
Specifically, it has been reported that the Iraq Finance Minister issued a statement saying they have prepared a plan to increase the value of the dinar against the dollar and will introduce 25, 10, 5, 1, 1/2, ¼, and smaller (possibly 1/10 or 1/20) dinar banknotes and/or coins. He said that successful fiscal policies pursued in Iraq have contributed to increasing the value of the Iraqi dinar against the dollar, noting that the U.S. Dollar dropped significantly in value during the current year. Of note, he also said in a press statement that the bank has been following with great interest the phenomenon of low demand for the U.S. Dollar in the local Iraqi currency exchange markets.
Mudhhir Muhammad Salih, a member of a Central Bank advisory panel, said by the end of 2010, new banknotes will be fully introduced while the current banknotes will be gradually removed from circulation. He did not specify when the new banknotes would be issued. Both (current and new) denominations will be legal tender in Iraq until the current banknotes are completely withdrawn over a period of time.
Economic analyst Hilal al-Tahhan was quoted as saying “the bank's move is overdue.” He said he expects the currency change to go smoothly because of the decision to allow both the current and new banknotes to coexist during an extended exchange period, leading to less turbulence in the economy.
What does all this mean? Overall, this news appears to be very positive and possibly points to some significant changes in the value of the Iraqi Dinar. It has long been the opinion of many Iraqi Dinar investors that the Iraqi Government must introduce new lower denominations into their economy before the value of their currency increases. If the value (buying power) of the dinar increases significantly or rapidly, the larger denominations currently in circulation would be impractical for use during everyday transactions in the Iraqi economy.
If the Iraqi Dinar increased in value to 10 cents (.1 USD), the smallest banknote in Iraq would have a value of $5 USD. There would no practical way to purchase everyday items in the economy and no way to make change---the currency would be impractical and unusable. If a soda in Iraq has a value of 50 cents now, it will still have a value of 50 cents if the value of the dinar increases---there has to be a denomination in the Iraq economy to pay for it. The current problem is that Iraq doesn’t have any currency in circulation to pay for normal day-to-day products if the dinar rises significantly in value---Iraq must have smaller denominations moving forward.
Also from the recent news, it appears as though all denominations (current and soon to be issued) will be in circulation at the same time and no immediate exchange will be necessary. Hopefully, theIraqi Dinar will be on the world exchange market soon to allow for even easier exchange in the near future. Expectations are that Iraq is moving as fast as they can to rebuild their economy and wealth, and join the international economic community.
There have also been rumors about the future exchangeable value of some current Iraqi banknote denominations, and limited time periods for exchange of current Iraqi banknotes. It has been falsely rumored that perhaps the 25,000 dinar banknote will be exchanged at a different exchange rate than current smaller Iraqi banknotes.
Another false rumor suggests there will be a very short period (days or weeks) of exchange for the current Iraqi banknotes after a significant change of value and introduction of lower denominations .
Well, to address these rumors, let’s look at currency from a basic level: Countries issue their own currency. They issue their currency with a responsibility to honor it and redeem it. The currency must be accounted for. When a country issues currency (the US as an example), they borrow against the currency and issue debt to support it. The US recently printed a significant amount of currency in order to finance stimulus funding. In order to do this, the US government had to borrow the money with an obligation to pay it back.
One of the main functions of the US Treasury Department is to manage the U.S. national debt (the amount of money which the federal government owes to its creditors). China owns much of our debt as do US citizens and other countries---we must honor our issued currency and our debt. If a country doesn’t honor its debt, creditors (other countries and investors) lose faith in the defaulting country and a country will end up in financial ruins. Iraq, as a responsible member of the world economic community with a goal of getting their currency online with the rest of the world currencies, has issued currency with an obligation to honor it----all of it---not just certaindenominations.
Throughout modern history, I can't think of one instance where a country honored some denominations , but not others---it doesn't make sense---people and other countries would lose faith in that country's responsibility to respect their debt and honor their issued currency---who would trade with them, exchange with them, or conduct business with them? To limit the time period for currency exchange in order to force the de-valuation of currency in circulation in order to reduce debt doesn't happen and wouldn't be tolerated by the world financial community.
Countries have to be accountable for all of their currency and they can't play games with exchange timelines to try and prevent people for exchanging. Remember, in addition to individual investors, large governments and banks outside of Iraq hold Iraqi currency. Money from all over the world has flowed into Iraq through the purchase ofIraqi Dinar . The Iraqi Government will honor that investment in their economy, or there will never be faith in their economy and they will never be accepted by the world financial community.
http://www.dinarbanker.com/information-articles/iraqi-dinar-redenomination-and-exchangeability.html
Related articles~
October 27, 2010
The mission of the new Iraqi dinar is to raise the price in the currency market
الدكتور سعد الحسون الحيالي Dr. Saad Al Hassoun Hayali
The deterioration that took place in Iraqi dinars since the early eighties of the last century as a result of economic policies random non-scientific, which followed the Iraqi political system before,
Who pursued the policy of broad consumer spending Bcatrih military and civil cause of the deterioration of the Iraqi dinar to the bottom so that the purchasing power of the Iraqi dinar today fils Iraqi equivalent prices in 1988.
That monetary policy Iraqi conscious exercised by the Central Bank of Iraq's current political circumstances, economic, social, very difficult, and hanging over the fact of the bombings and the destruction of infrastructure, but the Iraqi Central Bank was able to achieve balance and stability of the Iraqi dinar, to maintain the cover of the Iraqi currency (reserve currency foreign and gold) in spite of government pressure, the use of this balance in public investment, but the Central Bank of Iraq has managed to fend off these pressures, and work according to the contexts of the global central banks
The issuance of the new Iraqi dinar should not be designed to delete the zeros, but must be placed a price equivalent to the U.S. dollar, the fact that the Middle East regions of the dollar, it must be new dinar equation: New Iraqi Dinars IQD is equivalent to 1220 and added to the cost of issuing one new dinar.
And be here the issuance process meaningful is not the deletion of zeros, but the withdrawal of currency excess of the market and therefore absorb part of the inflated prices, and facilitate the process of trade, and improving financial control of the governmental apparatus, and to facilitate the feasibility studies for investment projects, and raise administrative efficiency. والتقليل من ظاهرة الفساد الاداري . And reduce the phenomenon of administrative corruption.
The mission of the new Iraqi dinar is to raise the price in the currency market
الدكتور سعد الحسون الحيالي Dr. Saad Al Hassoun Hayali
The deterioration that took place in Iraqi dinars since the early eighties of the last century as a result of economic policies random non-scientific, which followed the Iraqi political system before,
Who pursued the policy of broad consumer spending Bcatrih military and civil cause of the deterioration of the Iraqi dinar to the bottom so that the purchasing power of the Iraqi dinar today fils Iraqi equivalent prices in 1988.
That monetary policy Iraqi conscious exercised by the Central Bank of Iraq's current political circumstances, economic, social, very difficult, and hanging over the fact of the bombings and the destruction of infrastructure, but the Iraqi Central Bank was able to achieve balance and stability of the Iraqi dinar, to maintain the cover of the Iraqi currency (reserve currency foreign and gold) in spite of government pressure, the use of this balance in public investment, but the Central Bank of Iraq has managed to fend off these pressures, and work according to the contexts of the global central banks
The issuance of the new Iraqi dinar should not be designed to delete the zeros, but must be placed a price equivalent to the U.S. dollar, the fact that the Middle East regions of the dollar, it must be new dinar equation: New Iraqi Dinars IQD is equivalent to 1220 and added to the cost of issuing one new dinar.
And be here the issuance process meaningful is not the deletion of zeros, but the withdrawal of currency excess of the market and therefore absorb part of the inflated prices, and facilitate the process of trade, and improving financial control of the governmental apparatus, and to facilitate the feasibility studies for investment projects, and raise administrative efficiency. والتقليل من ظاهرة الفساد الاداري . And reduce the phenomenon of administrative corruption.
Iraqi Finance renewed its claim to raise zeros from the local currency ...
Links - Iraq's Currency and Monetary Policy - "Remove Zeros" ...
