Raise zeros from the Iraqi currency ...
March 2011
_Raised the proposal to delete the zeros of the Iraqi currency, which was adopted by the CBI, a sensation with government agencies and economic development in Iraq regarding the extent of its implementation, and Alatharwalanekasat currency on the current Iraq under the circumstances faced by the Iraqi economy, in time, who raised the subject of deletion of zeros from the Iraqi currency sensation between the pros and cons about what can be consequent effects in the economic sector, especially the volume of currency in circulation in the Iraqi market estimated at up to 30 trillion dinars.
Where he sees specialists in economic affairs that in the implementation of this proposal serious consequences begin to appear on the market that will occur upon changes in hit and suffer the consumer is the biggest loser of this process, especially if the implementation of the resolution in a sudden and rapid, and this does not mean the absence of optimistic this project and require the Iraqi Central Bank to adopt the implementation of this proposal is progressive and in turn so as not to be the effects of this decision serious consequences on the market and the consumer, and warned of the consequences of the implementation of the proposed rapid and sudden, as well as the proposal to delete the zeros of the Iraqi currency if it is implemented in a sudden and quick decision will have serious implications for the consumer.
_And about the views of opposition to the project to delete the zeros proclaimed defenders that the opponents of the resolution providing justification is unacceptable objectively, by some definitions, one of the axioms of monetary theory, which put in front of senior professors of theory of monetary policy-makers the central bank, such as: that the central bank aimed at the events (they cash) of the public and Sestdrj emotional feelings about the sense of the improved value of the dinar nominal not real, and the right that it is not this argument a large merit by virtue of the availability of scientific expertise and practical cadre developed in the central and this according to the views of advocates for the project raise zeros, In addition, the Proponents argue that raising the zeros will create psychological effect to the citizen through the strengthening of its currency and adopted more widely, rather than foreign currency, which is demand for them as it is the value of the high and the ease in pregnancy and the difficulty of counterfeiting.
Not to mention that the process of lifting of the zeroes will contribute to raise the value of the currency and reduce the rate of demand for hard currency, which is characterized by force and will lead to re-balance between the value of local and foreign currency and give it market power at home and abroad. While oppose the process of lifting of the zeroes believe that the dinar will lose its value and depend on the price index in the local market. Revealing that through the gradual rise of prices would lead to high rates of inflation, so that the bank has to raise zeros will increase prices and rising inflation rate and we have to repeat the same process again.
Therefore Opponents believe the postponement of this process at the moment because it will create confusion in the Iraqi market and will cost the Central Bank of huge amounts of money through the process of drawing, printing, replacement, especially the amount of currency in circulation in the Iraqi market is currently estimated at up to 30 trillion dinars compared to what it was the amount of currency on our web site in 2004 and which $ 4 trillion dinars. Noting that the approach to support market stability and the national currency will be better and more effective than replacing them with new value and other currency
_This has begun to Iraq is witnessing a great and inflation gradually since the outbreak of war with Iran in the early eighties of the last century and the subsequent siege and invasion and zeros have been added as a kind of control on the Iraqi market has led to a doubling of the cash block several times.
_Ilhoud so that there is a split among economists between opposition and supporters of the deletion of the Iraqi national currency Alasfreetn
_And we will try to identify by searching for these divergent views , with the adoption of the view that the process of lifting the zeros need to tan and the development of initial test results before proceeding with implementation, and there is a simple example, we can test the market, a process of converting balances mobile phones from the dollar to the Iraqi dinar .. Here we find that the negative effects caused to a particular category are the agents of foreign companies, while the conversion and to deal in dinars and became a confusion in the discharge process the existence of small currency.
Not to mention the increase zeros are not night and overnight but started since the beginning of the nineties of the last century means that we are dealing, up zeros currency Twenty years ago, and it must be the change gradually rather than abruptly so as not to affect the value of the new currency to be deducted in the local market " . Aim: By identifying the views of specialists in the economic affairs of Iraq, determine the pros and cons of the proposal to delete the zeros from the currency value of the Iraqi National _Research problem:
_Ambiguity effects and implications on the value of the national currency of Iraq, and the price of foreign exchange under the variation and differences in the economic views.
_Hypothesis:
_Inflation in the Iraqi economy in the levels of non-disturbing, than for Aidawa to implement the proposal to delete the zeros, which may cause the increase of demand for goods and services in light of the emergence of the phenomenon of monetary illusion
_First research
_Monetary policy in the face of inflation
_Is the monetary policy pursued by the Central Bank of Iraq after 2004's admired by those interested in economic affairs of Iraq, which contributed to this policy in stabilizing the national currency, which was reflected in the stability of the overall level of prices and low inflation rate of around 50% to 3%, according to statistics from the World Bank Central, and the attic in this section we will discuss the origins and evolution of the national currency and the Iraqi Central Bank and its policy in the face of inflation.
_The first requirement: the origins and evolution of the Iraqi currency
_The national currency is the Iraqi dinar has been the issuance of such national currency for the first time in 1931, the Dinar was at the time equal to (7.32382) of a gram of gold according to the law of the version in the year 1931, and in this period and the period of the previous Iraq was under British control. And the rest of the year 1947, stressing that a state of dependency cash for England, The value of the dinar foreign vary according to the change in value of the pound sterling and regardless of the circumstances and economic conditions and the local cash in Iraq, the most important reasons for this dependency due to political reasons and other economic The first is the subordination of Iraq to control the British colonial and the second in severe economic and trade ties between the two 0 (1)
_In 1959 a new law of the national currency of Iraq, which became under which the dinar currency and monetary union background of the Republic of Iraq (2),equal in value (2.48828) of a gram of pure gold, and this represents progress in breaking the cycle of dependency monetary shift "important and essential to build a monetary system independent Iraqi for international currencies and continued monetary system and banking development in Iraq, that started the Iraqi currency to decline with the wars waged by the political system in Iraq, not to mention the economic blockade as it reached the dollar equivalent of three thousands of dinars, and to higher levels when approaching strike coalition military dictatorship, which ended a 0 and it began a new phase of Iraqi currency, which went through several changes in its history, most recently in 2004 when the former Governing Council replaced the previous currency, which was a symbol of the former regime. To put on new laws to the Bank's work in light of an independent body and mind emerged as the role of the Iraqi Central Bank through Aalajraouat effective and affecting market liquidity (cash basis), namely:
- 1. Auction of foreign currency and where to buy or sell the Iraqi Central Bank of the dollar or to the market in the light of its political objectives.
2. a list of the legal reserve requirements and the banks are in the possession according to customer deposits and any differential levels of deposits with the Central Bank of Iraq, cash in the safes and securities of the Ministry of Finance.
3. facilities exposure of banks that have balances of reserve accounts in the Central Bank of Iraq, but not sufficient to settle the obligations at the end of banking day.
_Hence monetary policy has an important role in maintaining the value of the Iraqi currency
_It may be useful to point out here that what determines the value of the currency is linked to development of the economy as a whole state of scales external deficit or surplus is one of the most important factors as the existence of the old man in the external balances help to lower the value of the currency by increasing the demand for foreign exchange in order to fill the shortfall and obligations and which are in foreign currency this process, "any increase in demand for foreign exchange" is that directly affect the valuation and economic status. Bamahsalp by the currency to strengthen it depends on a combination of factors are in the end, the strengthening and development of the economy and its sectors. Therefore, the zeroes would not be a play to save as much as address the currency in cash.
_The currency has two values value of internal and external value and either foreign currency is the Iraqi dinar exchange rate against foreign currencies, we are currently witnessing the exchange rate stability and a clear value (1170) dinars to the dollar and this stability works to promote investment opportunities and facilitate and strengthen the planning for the future and makes the citizen Mtmona will be busy of any fluctuations in the exchange rate unlike the years before the year 2003, which was changing the exchange rate five times during the day (1)
_But now price of exchange is stable and this is the success of monetary policy in place to bank in the stability of the external value of the Iraqi dinar either at the level of the value of Interior of the dinar is difficult to separate the values of internal and external of the dinar, but the goal is to address the overall level of prices, and this level Homwhrat inflation in the Iraqi economy is to be adopted by the World Bank Central is the basis because the index of consumer prices Deleted Menna fuel prices and some food Kalkhaddr.
_Hence, the bank economist praises Iraqi and policies that have contributed to the stability of the value of the Iraqi currency, the country is enough political problems and security, to the stability of the currency, which contributed to maintain the general level of prices in the consequent social stability, which contributes to economic stability.
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