One of the things today was a gentleman that comes out who’s been around a long time, but he has his own opinion of what delete the zeros means, I have here about 1234 minimum, there’s probably five or six, actually, articles specifically talking about, in this case, removing zeros from the Iraqi Dinars back in the spotlight. Well, so when did this one come out?
So the central bank of Iraq has confirmed that the project to remove the zeros from the dinar is subject to continuous review and study. And it says this is done by removing a specific number of zeros from the nominal value of the currency.
So from the value of the currency, not the currency notes, but the value of the currency. Amending some monetary policies in line with international situations to enhance confidence in the iraqi dinar.
They’re going to enhance the confidence in the iraqi dinar, so create value and they’re going to enhance confidence. And so who’s talking here? Alak, which is the central bank governor, points out that the central bank of Iraq increased its holdings of foreign exchange.
So the dollar reserves, other foreign reserves have increased and gold reserves have increased to strengthen the country’s financial position and stability in order to enhance its ability to confront potential economic crisis. So those three things right there tell you that there’s a positive note. So when you hear things out there that have a negative stance to it, that it means absolutely nothing, which you’re going to hear today. Is counter to what Alak is saying.
The process of deleting the zeros is linked to the central bank of Iraq, indicating the issue was not new and was previously discussed about 14 years ago. So the good doctor Shabibi was around during that time. And they haven’t shelved this project.
And it’s gonna be obvious to you guys that they still haven’t done it. Cause why would it be so much in the news in the last week? It wouldn’t be. It says, the economic researcher in this case points out that removing zero leads to flexible dealing with local currency and strengthens it.
There’s number four, and it may lead to increased production and diversification of the economy and thus enhance the value of the iraqi dinar. See how that works? So the gentleman goes on, says countries resort to deleting zeros when there is an expansion in the value of that printed currency. And problems occur in the book value and accounting entries for the purpose of restoring accounting balances.
We’re going into a digital world, and I think the accounting balances can happen like nanoseconds. So Iraq is currently suffering at the moment with problems with the exchange rate. This is on the 23rd. And they’re talking about the value of printing and replacing costs Iraq time.
It costs the money and millions of dollars. Of course it did, but they’ve already spent the money. I think we all know that they did that probably back in 2018.
The situation now requires focusing on how to maintain the value of the currency against foreign currencies. That’s where the central banks come in. That’s where the IMF, World Bank, US Treasury, bank of International Settlements.
The European Union, the United States, everybody, all the countries in the world that are going to have their foreign reserves in dinar are going to probably want to support the value of that currency and help to defend it. And that’s what they talk about. So, it says that we don’t expect, this is Soleil, this is the advisor to the prime minister. And this was with a big, major news outlet.
It says, we do not expect major problems in 2024, but we need stricter financial discipline in 2025. So even to back up just a little bit more, here’s Alak again, adding that the project to leave the zeros in Iraq is subject to continuous review and study at the bank.
So he’s telling the people constantly that We’re going to enhance confidence in the iraqi dinar and prevent a sharp decline in its value. That’s what Alak says.
We’re going to enhance the confidence in the dinar and prevent a sharp decline in its value. If you guys remember back what did al Saddani said, he warned the citizens twice, at least be careful with your dinar. Don’t get rid of it. It’s going to be stronger.
So the two big guys, Iraq prime minister, Iraq’s central bank governor, has told the citizens, we’re going to do what, we’re going to bring value, just like we talked about and Alak talked about. So he goes on and stresses that the central bank of Iraq increased its holdings in foreign currency and reserves, again reiterating the same situation.
Financial stability is involved. Enhance what? The ability to confront potential economic crisis. So there’s a reason for it.
It’s powerful and it’s not to diminish the value of the currency or to keep the currency the same. You might hear from others. Okay. So you got to be really careful, basically.
What are they talking about here too? They also, regarding the crisis of exchange rates. He explains, this is back, okay. This is back in 2020.
The Chinese won the indian rupee, the euro, the UAE, Durham, all of these and the dollar were and have been reduced.
Because they reduce the reliance on the us commercial transactions for customers. So now the central bank seeks to withdraw excess liquidity.
So when the central bank of Iraq is removing excess liquidity, that’s taking in dinar. What does that do? Enhances the value of the currency supply demand, reduce the note count, the value goes up.
He points out the foreign exchange reserves are the tool used by all central banks to maintain the stability of a local currency exchange rate in the face of crisis. So I just got through telling you that the central banks around the world, the biggest ones that are going to be involved.
And they’re going to help Iraq maintain the value of the local currency exchange. So they talk about the reserves and they go on to talk about the context of why they use the currencies.
He stresses that the process of deleting those zeros in the currency means replacing a new currency. Well, this means replacing a new currency with the old currency. In other words, they’re going to take the old and get rid of it and bring in some new currency.
So could we expect to see that here shortly? I don’t know about you guys, but I would if there’d been talking about this many articles about deletion of the zeros project. You need, if you’re going to create value, you’re going to have to have smaller denominations and you likely will have to have coins.
There’s no need for coins. They will not ever do that. And the reason why is because how in the world could you get by with one note and the value of it is at triple zero seven, right?
The project deletes the zeros, is subject to continuous review. They go through that. It says, we like to point out the bank has taken the necessary measures to complete the process of localising salaries, for instance, in the Kurdistan region.
So you’re unifying everybody, getting them all on the same page, how they’re doing that? They’re doing it through digital electronic cards. Right? So they’re going to localise.
They have the unified treasury account, and that’s probably going to be blockchain oriented.
Iraq’s central bank has been working with Fin tech companies to do new technologies. They’ve trained the people in Iraq, at the central bank to use this new technology. And it’s blockchain, it’s the blockchain ledger. It’s for all the transactions that are going to go through the country.
All transactions are going to go through it. So when they warn people like these, these transfer agencies, these banks, etcetera, that don’t overcharge people fees, because why? Because the new system is going to know that you did. And if you keep doing it, you’re going to lose your licence.
So here it says, the central bank governor’s activities of sanctioned iraqi banks continue in all currencies except the dollar. Again, it’s talking about what reduction of the reliance on the US dollar in commercial transactions.
They have rules and regulations in the country. They have laws. You’re going to have to do business in the dinar.
It says adding the project to zeroes in Iraq is subject to continuous review. Again, they reiterate the same thing. They’re talking about the number of zeros will do what?
By reducing them, it will increase the nominal value of the currency. He says that again, enhanced confidence of the iraqi dinar. They go on to say that holdings of foreign currency in gold, they keep reiterating it.
So I mean, it’s like time and time again they’re hammering this home to the citizens. They’ve been doing that for quite some time. And they’ve got. What does it say that they’ve got about importing?
They got 15 months worth of reserves on hand to cover all their imports. And whereas most countries in the world only have six months. It’s over double.
It says what would happen to the iraqi dinar if the zeros were removed. And it was a comment by Doctor Mahoudofer.
He pointed out that delete the zeros will not change inflation rates or the purchasing power. I’d stop right there, because if you do the math on it, if you drop the three zeros from the currency, there’s a value change, I mean from the exchange rate of the nominal value of the currency.
We’re talking about deleting three zeros from the exchange rate. So if this exchange rate is at $1 divided by 1310 gets you, .007,643 etc, or real close to that, which is less than a penny okay, one dinar, far less than a penny.
So then, if you drop the three zeros off the exchange rate, you’ve really done a big service. You’ve created value to that currency. Because if you take $1 divided by less three zeros, you’re going to get, what? 0.76.
So you drop three zeros from the exchange rate. That is value. So if you look at less than a penny to $0.76, right, okay. Then they move forward to another thing is, once they’ve zeroed that out, if you will, they can add the real effective exchange rate based off the non oil revenue streams we talked about.
And there’s massive amount more. Their oil, their non oil tourism, all of those things will be added to that number. That’s where the value comes in.
Well, they’ve already told you numerous times in the articles, this is not something that hasn’t happened before. And does it happen?
Sure does. So, he goes on and says that it’s about psychological impact, facilitating accounting transactions. That’s true. It is going to be a psychological.
There will be psychological impact of facilitating accounting transactions. Sure. It makes it a heck of a lot easier. You’re not carrying around bundles and stacks of 25,000k notes, right?
Because those, each one of those one notes, one dinar, is worth a triple zero. Seven, six. It’s a sub penny stock, everybody.
But once you add the value to it, now you don’t need as many of those currency. So of course, that part. There’s some truth to what he is saying, but yet he’s not right in the sense that they’re not bringing value.
The idea of deleting the zeros has been on the mind of the central bank of Iraq for a long time. And it’s under consideration. He’s agreeing that Alak is still considering it.
He says, the amount of money on offer, according to his observations.
After removing the zeros, we will. Will amount to about 105 billion dinars, which is exactly the same amount.
And the exchange rate will be 1320 dinars to 132 dinars. Excuse me, but if you guys do the math on this, you’re going to find that what I just said brings value. And so he’s flat out wrong. The guy needs another job.
That’s what I think. Or he needs to change the topic. He can still talk about economics, but he might not want to talk about the math. Symbolic value of the history of the iraqi dinar.
So it says the most important benefits of deleting the zeros are the psychological impact. The most important is not going to be the psychological impact, It’s going to be the actual true value or real effective exchange rate. It says though, the impact on the citizen and the symbolic value of the history of the Iraqi Dinar.
Is there a symbolic value in the history of the iraqi dinar? Yeah, they sure do. They were at $3.22 back when Saddam Hussein was around.
And to that degree it was probably a little bit overvalued at that time, but it was all based on oil. That was it. Now you have all these other components to take into consideration. So I mean, be serious about it.
So it says here it’s better for the currency replacement process to be accompanied by intensive electronic payment activity, he’s actually admitting that what they’re doing right now is, and they’re in that process of replacement process to accompany intensive electronic payment activity. Well, they issued what, 40 million national cards. Everybody’s getting bank accounts and they’re all getting what they’re getting geared to do specifically what this guy just said.
I have an explanation that goes over the equations effectively from $1 divided by 1310 equals it looks like what? 007634, like I mentioned. So, but then if you take a dollar and you $1 and you divide it by 132 IQD, what do you get?
You get 007576. Okay, and what does that do? There’s value right there. It’s that simple.
In his own article, he writes about it. It goes, drop two more zeros. If you go so far as to what they said three zeros, like Alak has been talking about, it will look like what? One USD divided by 1.32 by dropping the three zeros, IQD equals 0.7576.
So there’s value there. Then add the real effective exchange rate, which we don’t know, nobody does. Well, Alak and them do.
And the central bank and the bank of international Settlements probably by now do World bank would probably know by now too. I’m not so sure that the government people don’t know that yet. If they don’t, they’re going to know very quickly as far as I’m concerned. If not, well, then we’ll find out what they say they have to do.
Alak has not come out and denied that he’s not working on the project. We got data all over the place.
