HoosierGirl: Question – it seems imperative for the CITIZENS of Iraq to jump on the band wagon (so to speak) and trust the banks to handle their currency without stealing it. After decades of not trusting, AND with Frank stating that it is critical for the citizens to do this in order for the reinstatement to be successful (IMO), how long can that take???
This isn’t quite settling with me. You either reinstate and that’s the currency, or you don’t.
How can this be done based on whether it’s popular with the citizens? THEY have been told it’s coming and seem to be welcoming it.
I believe Delta mentioned that teaching/training of the citizens has been going on for 3-5 months now (either on a call or on the Forum IMO, best I recall). I think this last big push of “FINANCIAL INCLUSION WEEK” could be the final thing needed.
Any input or response here! Thank you.
ChrisC: I agree. You don’t leave decisions that affect the success of the country up to the ignorant masses. Leadership informs them of the direction they are going and then that is what happens and the masses deal with it. The world would fall apart if it was any other way.
HoosierGirl: After reading Post #129 again, I believe the “success” of this new financial banking system is why they need the citizens confidence. It’s about the success of banks, MC/Visa, e-banking, etc. that rely on the citizens trusting the banks.
It’s NOT about relying on the citizens for the success of the reinstatement. At least this my conclusion all IMO IMO IMO
ChrisC: As things return to “normal” in Iraq, there will be more and more acceptance IMO. They have Kuwait as an example and once they start getting a share of the oil profits on their cards, they will gladly accept the modernization, IMO. Did you see the ritzy level of the mall that was behind the people handing out cards? That looked like a high end mall in Dallas.
Walkingstick: FYI… 1 of many in print …
29 January 2007
Columnist: Doe, James W.
Skepticism about Cedi Redenomination
The motivation to write on the cedi redenomination is the apparent evidence of the ill-preparedness on the part of whoever is initiating this change. Hence, there is need to query about whether it is necessary and at what time frame; thus why at such short notice? The right of Ghanaians to know the cost involved its acceptability and the overall beneficiary of the policy if it is implemented.
There is ample evidence from international finance and policy making documents of about fifty countries that I have studied, showed that throughout the past four decades redenomination has failed in a lot of countries.
It has become so because it has been used as often as new governments were elected into office or legitimise a bad one. It is therefore, clearly becoming a tool of retaliation and bad governance even in Africa.
This problem is visible when redenomination conceived at will, planned badly and there appears to be a rush in its implementation. The ritualised use of redenomination is what has compromised the independence of Central Banks in any such country. This is why the justification of the first use of redenomination should be extremely compelling.
In most true democracies, confidence in a currency apart from being psychological and mainly economic also depends on who is head of, and what the Central Bank does. Including a simple thing like how often changes are made to the position of the governor of a Central Bank among others.
All these decisions affect the currency and the stock market. The Governor of the Central Bank in Ghana, no doubt is a skilled economist judging from awards he has received over the years, overseas experience and past job with a worldwide financial institution.
There is also, is the frequency of issuance of new currency and the fear of rampant redenomination in developing and transition countries. This is why good thought has to go into using this tool the first time as in the case of Ghana. There should be laws that will regulate its first use and the conditions for subsequent uses.
There are a few eye-openers to the current redenomination plan if it ever takes place. Things like consulting all stakeholders, allowing ample time as well as the timing, forecast the impact on dependable sectors of the economy, on sustainability of debts/debt servicing and investment.
It is good to predict the effect on businesses, private sector, small and medium-scaled enterprises (SMEs), imports/exports. Therefore, extreme care should be taken of bewildering control or infiltration of the economy by narcotics and laundered money.
A major concern should be what redenomination will do to the over-riding question of salaries/wages of the many public sector workers. And most importantly the exercise should not be perceived to overly reward a small sector of the economy be it politicians, a few individuals, government and especially banks, that have failed industry.
ChrisC: I am going to show my ignorance here I guess. How is the UN rate 1170 but the “official” CBI rate is 1184? And if that IS the case, if these sites that were reported this morning as having the dinar at 1184.99, does that indicate something has been triggered? Logic says (at least in my head) that if this is up to them, it should be revealed. For ALL the reasons that Frank and others have stated, it would appear that they are WAY ahead money-wise to do this. IMO
DELTA: YES…. OVERDUE…NO MORE EXCUSE FROM CBI…..ALL DONE…..NO INTEREST FROM BANKS FOR AUCTIONS…. NO MORE PROFIT FOR THEM SINCE THE MARKET RATE DOWN TO 1190.