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In light of economic conditions and volatile financial pressure and monetary inflation that has befallen our country before, and led to negative effects on the regularity of the commercial market and the labor markets and production and living standards of citizens, it has generated distortions many structures, economic relations, among which was the Activity block cash many
zeros of little value and way that is not commensurate with the future developments in the present and the future of the Iraqi economy, which requires a solution to these conditions and offal, and these solutions reform the
management of currency cash through the structure and the deletion of zeros to control the flow and management of the cost of the cash block optimally.
The trading bloc cash exporting more than 30 trillion
Iraqi dinars to the various groups and reflected by the number of securities traded $ 4 trillion paper money is the product of a long period of inflation and
economic decline, rising, for example, the index of consumer prices Bassas 1993 from 100 to 200,000 in the midst of the year 2003, which means that the item that was sold for 100 dinars became sold for 200,000 dinars … And so on. Under
such circumstances, the deterioration of the value of the coin currency rose greater than 25 dinars to 25,000 dinars, which means that inflation is added, these zeros
Categories do not fit with the current currency of the
current economic situation and the next.
For example, before the outbreak of the
Iran-Iraq war was the category of 25 dinars equivalent to $ 75 purchasing power
of the time or the equivalent in the present 300 thousand dinars. I said
inflation in the country over three decades of zeros to the currency, although
this did not raise those zeros of the purchasing power of the largest category
of the coin is 25 thousand dinars, which is equal to today’s $ 21. We need today to restructure the currency. Valasfar mean large
cluster of large cash in circulation today of about 30 trillion dinars, which
requested the circulation of cash directly and significantly to the cost of
sorting and counting and it takes time and spatial properties and security.
In the price system, is the price is expressed in exchange value
and thus the structure of costs and payments of salaries and the Cubs and
eventually become Akiem all transactions not commensurate with the needs of the
country into a cash management system consistent with the restructuring of the
real sector and price levels reached. The country needs a monetary system is
easy to handle small groups and large reflect the real cost of that
structure.
Especially if we know that inflation means self-rising
prices of cash money price of goods and services (ie, how much money we need in
exchange for package of goods and services .. the more increase the amount of
money allocated in exchange for the package itself means that there is inflation
or a rise in the price of money) . note that the value of money is inversely
proportional with the price of money, especially if Maalmana that price is the
value of goods and services expressed in cash. Since the money is anything
agreed upon the community to become a broker of exchange and store of value and
unit of account, the money (legal) issued by the Monetary Authority under the
law and with the power of discharge of the receivables and is seen as a social
institution Social Institution increases the efficiency of the economy and
economic ventures in moving the exchange efficiency of the institution social or
money, and vice versa. Has led to high inflation continued currency of No. 23
billion dinars in 1991 to about 30 trillion dinars at the present time, the high
currency the largest category of 25 dinars to 25,000 dinars over time. In this, draw the inflation figures of new currency in circulation by
adding three zeros, which increased the amount of cash operations in nominal and
arranged the production costs of large quantities of them were accompanied by
operations, storage, and distribution of promise, sort and check to accompany
her and the levels increase, helped to increase the operational risks associated
with Operational Risk.
In the light of price stability and
optimism in Iraq’s future development, it became necessary to hold a radical
overhaul of management system of currency and the re-structure commensurate with
the structure of the new price is different, stable and levels of wages and
salaries, which differed significantly from the last thirty years, as well as
handling the mass of large cash weak components so that become the largest
category of currency, but not worth $ 21 U.S. for the time being. Noting that
the increase in gross domestic product, Iraq’s $ 140 billion at year-end 2010 to
more than $ 300 billion at the end of 2015, will raise the monetary mass
exported from the 30 trillion dinars to about 70 trillion dinars. And
installation in the structure of the weak currency as mentioned above may take
the added cost is called the cost of cash transactions in terms of traded
between individuals and within individuals, banks and the banking
system.
The demand for the U.S. dollar (in particular
the category of $ 100) has become an urgent need for the settlement of cash
transactions in the local market beyond the control of monetary policy to the
fact that market is looking at the transactions into categories, the largest
currently unavailable, but it reflected the category of U.S. currency large for
easy carrying and handling. Therefore, the monetary system of Iraq need to
reform the administrative order to have a monetary of high purchasing power in
the trading easy pregnancy and acquisitions in order to facilitate exchanges
cash for the purposes of transactions and trading noting that the imbalance in
the structure or installation of monetary units have the depth of the problems
of “dollarization”, which impacted undesirable on the effectiveness and
performance of monetary policy.
In Sweden, for example, that where
there is currently one of the best systems of cash payments in the world,
however, the cost of trading cash counting, sorting, transport and storage of
the coin cost the national economy gain of 4% of the GDP of Sweden. How can we
compare this in a country like Iraq shall be managed so amounts of cash
tremendous weak structure, which adds the cost of cash transactions may have up
to 8% or more of the gross domestic product, a burden borne by the individual in
his dealings, which took reduces the efficiency of the exchange as a social
support for the institutions of the economy different, including the market as
evidenced by the large cash transactions are limited to the payment in U.S.
dollars, which means substituting other country’s currency in circulation for
the award of cash transactions because of falling efficiency and installation of
the current monetary bloc.
And raises the multiplicity of the zeros on
the categories of currency with a lower purchasing power has enormous
difficulties, including the difficulty to express the monetary value as well as
the difficulties of monetary operations itself and the technical problems in the
recording of statistical data and registration in the accounting books and
changing the computer systems and settlement systems as well as show price
figures for a long difficult sometimes even counters or digital device, read the
digit at gas stations or other digital devices.
On this basis, the need
to reform the system of cash payments through the following
advantages:
First
- At the horizontal level: delete the three
zeroes
- Transfer of 30 trillion dinars to $ 30 billion by deleting three
zeros from the current currency and replace it with a new currency making it
easier to handle arithmetic with numbers are less numerous on the level of the
accounts of the federal budget, budgets of banks and companies as well as
balancing family cash (individuals) without arranging any change or change of
income or monetary wealth of the people, the natural and moral as well as the
lack of impact on the contracts and obligations between natural persons and
legal entities all. It generates a so-function sports homogeneous degree zero
Homogenous Function of Degree Zero, as long as the amount of new money covers
the smaller number in the package of commodity exchange in the same old money
with the largest number.
II.
- On the vertical plane, the
restructuring of the currency and installed
- As the large category of $
25,000 a JD alone (two thirds of the amount of securities traded), the biggest
issue categories mean reduction of four trillion banknote currently in
circulation and converted to a number equal to (2. billion
banknotes. Stakhtzel as large groups of the coin about 90% of the total
categories exported to the circulation.
Based on the foregoing, the cost
of cash transactions between individuals, banks, and between individuals
themselves, natural or moral will fall inevitably in terms of the cost of
counting and checking. If Maalmana, the banknotes traded eroded the average over
a period of five years, which means the replacement of enormous mass weak
structure and the consequent costs of printing specifications, a high-security
burden is borne by the authority of another version of the remnants of a cash
management system cash generated by the economic downturn and the former has
become not fit, stability and economic progress desired.
Finally, that
the reasons for changing the currency of the current reflects the fruit of
economic stability and success of the policies of the Iraqi Central Bank in
maintaining stability and of stability of the Iraqi dinar exchange rate and
lower inflation to the level of one decimal place and build reserves of foreign
support of the Iraqi dinar at levels not previously achieved during the last
thirty years ago, which is a cover Iraqi currency. In addition to improving the
system of cash payments and leave him stuck to the past and the actual
composition and its imbalances and economic re-construction on the future of
economic development and its data in real and nominal.
So, has prepared
the Iraqi Central Bank strategic long-term viable future, when the availability
of the appropriate opportunity and gradually according to clear instructions and
regulations, guidelines provide protection of the rights and interests in line
and the stage of prosperity ahead, economic growth is expected in terms will
increase the average per capita income in the coming years to more than once and
will step steps towards economic progress, which requires a reform of the waste
stages of inflation and may require some legislation in this regard.
D.
The appearance of Mohammed Qasim
Deputy Governor of the Central Bank of
Iraq
