I think they did it again…. yet more news and priority for electronic payments and comprehensive bank inclusion. Is it important prior to any RV?
If you remember last month, the Iraqi economist Yasser Al-Mutawali asked the question to the Finance Ministry and to the general public – “Is It Time To Remove The Zeros” ?
In conversations last week with my CBI contact I was told by the committee in charge of working on this project and executing it, that they are targeting November 2024. This period will begin the process for the swap out with the newer lower denominations. To me this also means about a 1:1 at par rate of the IQD with the US dollar. But remember this is IN-COUNTRY only. Also remember these actions ALWAYS have dependencies. So let’s talk about these dependencies and make sense of them today.
Once again, the Project to Delete the Zeros raises its head up. But also remember the past. I know from experience from many of my conversations with my CBI contact that they pivot on goals, set them and then move in that direction. Often, they underestimate the timeframes needed to meet their goals they have to do to get there first.
It is all just about implementing the Electronic Payment and Inclusion of the banks into this new process, it is the effort by the CBI and the Finance Committee. They are committed now to complete this effort, and I believe they are way beyond our expectations of just where they currently stand in this effort.
Ali Al-Alaq is still the acting Director of the CBI just as we were told by my CBI contact the GOI never did accept his resignation. The goals are still the same as they want to eliminate this Black Market corruption with the dollar and set the rate first at par with the official CBI rate. Then once this is in control, they intend to change the official rate and the rest is history as the saga of the currency swap out can then occur.
They are talking about the stashes of currency outside the banking system and tell us that there are about 70 trillion dinars (about 50-60 billion US dollars) of free money supply, pointing out the possibility of investing it through the transition to the electronic system in financial transactions. But how will they do this? How can they get the citizens to turn over this money to the banks to get it digitized?
Economist Qusay told Al-Maalouma told us that by focusing on investing in financial inclusion is accompanied by many benefits, the most prominent of which is withdrawing the free cash flow outside the banking system into the banking system. This is estimated at about 70 trillion dinars, or an average of 2 million dinars for every Iraqi citizen.”
We have read in the past that this effort to get this amount to the banks, could lead to an increase in liquidity in banks and increase their ability to grant through small and medium income-generating projects or by increasing the capacity for long-term strategic investment financing? They also point out that – “Iraqi banks have the qualifications to switch to the electronic system, noting that “the transformation of the financial sector to the electronic system with credit cards will pave the way for attracting international investments and increasing confidence in the Iraqi economy.”
In short summary, is this not what we all want to happen so they can pull the trigger on this revaluation and reinstatement.
