Walkingstick: F.. this one……
Is Iraq resorting to printing currency to overcome its financial crisis?
Adel Fakher – Baghdad
The appearance of Muhammed Salih, advisor to the Iraqi Prime Minister, confirmed that the options to face the financial situation are heading towards pressure of expenditures, and that the issue of printing the currency is merely a proposal that is not consistent with the Central Bank Law, which confirms that the printing of banknotes is aroutine technicalprocedure practiced by the bank according to the requirements of cash circulation, and that the printing process Completely separate from the cash issue process.
Saleh said that the government has financial procedures that will not lead to stumbling the salaries of employees, as it is one of the priorities of the government, indicating that their options for facing the financial situation are heading towards pressure expenditures, indicating that there is a team working with the Ministerial Council to restructure state expenditures, and that the issue of printing the currency is just a proposal that does not Consistent with the Central Bank Law.
And the Central Bank of Iraq issued an explanation regarding what is being circulated from the news about the possibility of printing an Iraqi currency to avoid economic problems, in which he affirmed that any party cannot withdraw banknotes from the central bank unless there are funds in its accounts that cover the amount to be withdrawn, and therefore, does not mean To say that the dinar is of any meaning other than strengthening the treasures of the Central Bank in accordance with the monetary policy, and not for any other purpose or purpose. The law of the Central Bank and Monetary Policy do not allow the issuance of cash in favor of an account without a balance.
The bank said in a statement that when the Ministry of Finance wishes to finance spending on different spending units and salaries, it requests the central bank to strengthen its account in Iraqi dinars in exchange for withdrawing from its account in dollars, so no amount is deposited into the finance account in dinars unless a withdrawal from its dollar account is offset.
Noting that the Central Bank Law does not allow him to lend to the government, whether by printing the currency or any other way, direct or indirect, and he is entitled to deduct the treasury transfers, if they are present in the secondary trading market, as it is one of the tools of monetary policy, as he saw this based on data Precise objectivity serving the objectives of monetary policy.
The balance of economic deficits and economist Salam Semsem asked about the nature of the cash issue and whether it was in the normal form issued by the government in exchange for coverage with a quantity of cash and a quantity of gold, the state’s commitment to the international community, the international economy, and the International Monetary Fund, and all this is measured by the state’s economic standing and the amount of wealth.
Sumaisem told Al Jazeera Net that the state now hints at the printing of the coin to coincide with the talk about the cash crisis and the existence of a deficit, and this means that there is a deficit in the economic balances represented by the general budget, the trade balance and the balance of payments, and this requires more money, so how can the state pay this deficit with the increasing expenses represented by salaries Wages and social benefits.
She also asked, “Will the printing of the currency be free of charge, and if it is, it will negatively affect the reality of the Iraqi economy through the collapse of the Iraqi dinar, which will lead to significant monetary inflation, and here the risk is possible because it will affect the classes with limited income, meaning that the amount of goods and services that it gets The individual as a result of his use of this income will decrease, and with it the living standards of the individual represented by the most important files such as food and medicine will decrease. “
The value of remittances
inrelated context,Central Bank issued instructions concerning commission cash withdrawal todollar, that it willregardless accounted 25% ofvalueremittancesdollars that comeIraqi banks dinar Iraqi, asmeasure to overcomefinancial and economic crises.
In this regard, economic analyst Dhargham Mohammed Ali explained to Al-Jazeera Net that this measure is caused by a lack of foreign currency caused by the decline in the price of crude oil in global markets, which is a temporary measure to cross the current crisis, indicating that it is a procedure followed in many countries that suffer from a shortage of currencies Foreign , as for the printing of the currency, it is not possible because it will harm the economic and financial position of Iraq and float the price of the currency and create greater economic problems, he said.
And on the ways to support the federal budget to cover the deficit, Muhammad Ali explained that this is done by giving away all unnecessary forms of spending, reducing the salaries of special grades and stopping the statements completely.
The Iraqi currency went through several phases, the royal edition bearing the image of King Faisal and continued until 1958, the edition bearing the Republican emblem until 1978, and the international edition, called the Swiss edition, which was printed at the British company Delaw and Soviet Exports until 1990.
Then, as a result of the circumstances of the economic blockade that Iraq passed through, the Central Bank of Iraq printed the banknotes at Dar Al-Nahrain for printing, and in the beginning of 2003 the central bank withdrew all local and international banknotes named Swiss edition and put the new series of Iraqi dinars consisting of seven categories that were printed with specifications High security, while continuing to develop these specifications, which prevents the ability to counterfeit or counterfeit them. LINK
Frank26: COPY SIR …………………….. YESTERDAY’S MONDAY CC IS ALL OVER THESE ARTICLES !!!
MilitiaMan: Add this into the mix if you will… Think about the timing of this article from Dr. Mazhar Muhammad Salih, then go back to the FIMA data and the Currency Manipulation Rules.. They are all in sync to facilitate trade in one shape or another and will have a smoothing effect for the global markets and for Iraq too.
Not just in the REPO market but the Currency and Oil Markets as well, imo. Keep in mind that the FIMA action to the Repo market, in which, is a massive market and it is nothing to sneeze over.
It has had to adjust recently (as being or having been infused with trillions of $ imo to back up banks for liquidity issues.) and with the new rules and facilities to be in place that will be effective as of 04/06/2020! The collectivism of all this data out now is not for just any old reason, imo.
The timing of this at this juncture paints a vivid picture in my mind. It paints a major power play into view. Iraq has no where but up to go from here!!!. imo
We know CBI Gov. Alak has openly stated he was not going to devalue the IQD. It goes against all of that that has been done to to date to keep the IQD stable and steady.
Then they tell us they are considering Bonds. They have done that before right? Yep, so why now and in a different manner? Well the Bonds may or will be denominated in Dollars. Just like when China issues foreign Bonds denominated in Dollars, there is interest paid on them.
Iraq can’t borrow any money from the looks of it lately from anyone. But, if they have the ability to get into the secondary markets with their currency and their stock exchange, they can use those mediums to get dollars into the future.
So not only could this be about Iraq going international in secondary markets terms, the FIMA just may be the mechanism to facilitate them to do so through the US FED.. Thereby, Iraq will need to reinstate their currency to do so.
Which will support other currencies around the world. imo
The ISX will with a reinstated currency will be reflected in her share pricing (securities). Securities are liquid cash, effectively. Iraq Bonds denominated in Dollars will pay interest.
Another form of liquid assets. Thereby, citizens will earn interest over time by buying said bonds with their three zero notes, hence, there will be a reduction in money supply, therefore, supply and demand supports the new rate by increasing local and global investment and direct local productivity.
Another outlier, is do to the virus and the global markets taking a bath recently. There is obvious concern about them both going forward. So much so they US Gov has voted on the largest stimulus package in the USA’s history because of it so they say, and not unlike Great Britain too, they followed suit in short order.
The packages are in the Trillions worth!! Where did they get the money? Last I looked the Debt Clock of the USA is still under 24 trillion and counting. Interesting.. Where did the 2-6 trillion $$ come from and how is it that the debt clock didn’t jump up significantly?
I am not sure. But, by the actions of Dr. Alak, Dr. Salih, the FIMA and CMR we can see there is a need for Iraq to reinstate her currency. Oil has tanked and they have serious concerns to even function and or pay salaries, bills, etc.. They stopped the dollar auctions as we know them and can not justify bringing them back either. Way to costly to the present program rate if they did. It would potentially cost them billions in losses to their reserves, as the exchange rate is presently now under downward pressures.
They are not going to be able to get dollars at a program rate, or they would still have the auctions. They’ll need the Secondary Market to get them from here on out. They’ll need securities on the Secondary Markets to facilitate Iraq getting dollars for trade. The Central Bank Law requires it.
Thereby, imo they are backed into a corner. Iraq not being on the secondary markets put them at a major disadvantage. They were not in a position to trade or hedge pricing into the future when oil dropped, therefore, when the oil price tanked they got clobbered, again.
Hence, Salih is apparently telling us they need to get on the secondary market so they can go long and short in selling securities, oil futures contracts, etc..
The ability to hedge is the way it is done on the secondary markets. All major players have that ability. (Sad to say, Iraq you knew all this along time ago. Your corrupt didn’t care.. Thank your neighbor and those who support them. imo) Whereas, at present they only make money when the oil price is high. This is why they are telling us all this information. Hedging will be useful to play the markets both up and down when prices change accordingly.
The USA has a powder keg called debt just as banks have too, in respect to the REPO markets. The FIMA is to smooth out the functioning of the financial markets in respect to not only USA markets but with international Central Banks and International Monetary Authorities.
So if the IQD reinstates to a true value, the implications suggest the FIMA action may very well be needed and big time to smooth out the markets.
Liquidity issues will come into play for foreign exchange and the US Dollar. The balance sheets for the UST and HMTQ will get a nice supportive boost to them. They both have the lions share of IQD outside of Iraq.. The FIMA will or maybe used to provide the mechanism and facilities to allow it all to run smoothly.
All while Iraq, reinstates an undervalued currency to one with value that the Secondary Markets have in mind and will be glad to purchase those securities for to support reconstruction of the country.
Also the Citizens too, can buy the Iraq dollar denominated bonds to help support that value locally.. So Iraq being backed into the corner, sure looks to be a good thing for everyone, except for those that have sanctions on their backs. (Sanctions that are going to be imposed harshly on Iraq if they miss their deadline. They only have 30 days now to cease payments for electricity.) jmtc ~ imo
So with that said, the cards are about to be on the table 04/06/2020 for those that need a playing card. Trump and the Queen will have a Royal Straight Flush when this is over in SPADES.. imo.. lol ~ MM
MilitiaMan: So with the
The deterioration of oil markets: the mechanisms of the present and foreseeing the future.
Currency Manipulation and Countervailing Duties
“The Administration’s most recent action on currency relates to countervailing duties. Under current U.S. law and World Trade Organization (WTO) agreements, countervailing duties (CVD) may be applied as a remedy for material injury or threatened material injury to domestic industries caused by unfairly
For years, some analysts have argued that currency undervaluation is the functional
equivalent of an unfair subsidy, and thus CVD should be available in this case as a remedy for injured
domestic producers (or those threatened with injury).
Some Members of Congress have routinely introduced legislation to amend U.S. countervailing laws to that end. However, due to a variety of concerns (many of which have been raised again in the current debate and are discussed below) Congress refrained from legislating on the issue. The rule-change by the Commerce Department in February 2020 administratively implements the policy by modifying existing regulations, without the need for legislation.
It is unclear which countries might be targets under the proposed policy, partly because there is
disagreement among economists about whether countries are able to manipulate their currencies and if so, the best economic models for estimating currency undervaluation. Treasury maintains a Monitoring List of major trading partners whose currency practices merit close attention, which in January 2020 included China, Japan, Korea, Germany, Italy, Ireland, Singapore, Malaysia, Vietnam, and Switzerland.
Federal Reserve announces establishment of a temporary FIMA Repo Facility to help support the smooth functioning of financial markets