new currency

[Zekiel]

if this right the new rate well be 1=1000 not 1-1

ww.kurdishglobe.net/display-article.html?id=3CBF63FA930E6C8FF6BBF1EDC3B7D027

Seems like this thread should have the actual article posted.

Saturday, 25 February 2012, 07:58 GMT

New banknotes to be introduced in September

The Kurdish Globe

Views differ on financial and socioeconomic impacts

Despite fears of a negative economic impact, the Central Bank of Iraq will remove three zeros from Iraqi dinar notes and print new banknotes in 2013.

The Central Bank of Iraq has agreed with the Economic Committee of the Iraqi Parliament to introduce the new banknotes in September 2012, which will be used in parallel with the current banknotes for a year. The CBI will completely withdraw the old banknotes by September 2013.

Abdul-Hussein Abtan, Economic Committee Member of Parliament in Baghdad stated in a press conference that there is an initial agreement between Parliament and the central bank to start the process of removing three zeros in September, and it will take a year to complete. The new banknotes will be printed in Arabic, English and Kurdish.

The CBI will introduce three new banknotes: 50 dinars, 100 dinars and 200 dinars. For smaller transactions, the CBI will also issue 1-dinar and 2-dinar coins which Iraq currently does not use.

MP Abtan says "The grant agreement is to ensure that during the one year process, the old banknotes are traded in the market and replaced by the new one."

The CBI expects this move to positively impact the country's economy; however, some parties say the negative consequences will be more serious.

The Security Commission says deleting the zeros will have a negative impact on financial trade in the stock market. Other opponents of the move argue it would pave the way for money laundering and want the government to reconsider its decision.

Supporters of the idea believe the introduction of the new banknotes will help reduce inflation, strengthen the Iraqi dinar in the international market, facilitate trade with international banks and other financial institutions, as well as reduce the social gap between classes.

"The process of removing zeros from the currency will contribute to dealing better with inflation, facilitate economic cooperation with international banks and reduce the differences in [standards of] living in society," Abtan explained. Mahma Khalil, another Member of the Iraqi Parliament and official spokesperson of the Economic Committee says an agreement has been reached about the mechanisms of introducing the new banknotes after a series of meetings and discussions with the CBI Governor Dr. Sinan Al Shibibi.

"According to the agreements, the new bill will be printed by a European company and introduced to the market gradually and in a well-planned schedule to ensure it will not result in shocks and would not have a negative impact on the market," explained MP Khalil. He added the exchange rate between the new banknotes and the old ones would be 1:1,000.

The objective behind this move is to appreciate the value of the Iraqi dinar against the U.S. dollar, which would in turn increase the balance of the Iraqi dinar and there would be sufficient reserves of that currency," explained MP Khalil. "Additionally, the economy of Iraq would grow and oil sales would also increase." Khalil added that Iraq has a reserve of $60 billion in the CBI.

The CBI previously stated it would consult with Parliament and representatives to see whether there would be a need for a law to be passed for this shift. The Economic Committee announced on 19 February it was introducing new legislation for the purpose and would also address the inflation issue in the country.

The introduction of new banknotes and withdrawing the current ones from the market is generally expected to reduce and control the number of dinars in circulation and would also help facilitate payment systems and control the banking transactions in the country.

http://www.kurdishglobe.net/display-article.html?id=3CBF63FA930E6C8FF6BBF1EDC3B7D027

[Zekiel]

Here is a chat discussion edited for this article, from Enoch8.

Enoch8: The article cannot be 100% right.... you certainly cannot take it word for word

Here is why

It only says a 1 and 2 dinar...... and the trade is 1 new : 1000 old.

That cant be the case, because the smallest coin they would have, would be worth $.86

Enoch8: These articles are just as speculative as what we are getting on dinar forums, IMO

It is easy to conceive, that a journalist with no more data than we do, would say that about the 1:1000 ratio....as he has nothing more to go on than what they are hearing.

But.... it is also conceivable, he may be hearing something new..... that the 1 Dinar coin might be the smallest denomination contracted for printing.

Enoch8: OK..... if that is so..... the current smallest in circulation is the 50.... supposedly not being used..... or the 250, still being used.

Enoch8: Watch :

The 50 is worth about 4 or 5 cents.

It would make sense that there is no need for a smaller value, if 1 new dinar is roughly 4 or 5 cents, same as the current 50 dinar note

OR.....

Enoch8: If it is the 250 they target..... it would be about 1 dinar comes out to about 22 cents.

Enoch8: I don't buy the later, for apparent reasons..... but the 4 cents lowest denom is in my personal target range, in ratios, once it comes out, because that might actually reflect a decent Old to New Ratio, better than 1000 :1, IF (Emphasis added), IF, the GOI will get behind the CBI in increasing the national liquidity. That is why we are waiting for Parliament for Monetary Reform Legislation.... and is a good thing, because CBI cannot do this on their own. If they did, this article would in reality, be the result..... namely a totally 'Revenue Neutral Event'. All we can do is hope they get it right. Nobody knows.

Enoch8: If you have been following my writings over the last 2 years, my low number has consistently shown roughly 3.4 cents, based on real time Market Demand for liquidity to be increased, in primary and secondary markets, from currently $26 Billion, (The value of total 30 Trillion IQD, less 24.8 Trillion {The 70% removed from excess liquidity and replaced with USD, from May 2010}) to an added need for Market Base and Market Stability approaches in the methodologies, per IMF working paper reports, like Peter Isaard, for one, and IMF art IV consultations........BUT..... should they actually remove the old from circulation, the actual exchange rate might be a little higher. No way to know what they will do, so we just have to stay grounded.

The new demand is closer to $560 Billion liquidity demand, based on the Ministry of Planning Basis year, 1988, when the basis liquidity was $80 Billion. Total liquidity is close to the M2 numbers, at only $60 Billion.... which is a direct reflection of liquidity remaining covered by reserves, after subtraction of liabilities, like currency in circulation. That is a $26 Billion Liability based on 30 Trillion reported by CBI as the estimated IQD in circulation. What this is saying, is that Iraq really does have the Market Demand, in Macro Econ, methodologies, according to Feasibility Studies, to take on that $560 Billion liability in real increased liquidity. Al- Saleh said recently, they plan to increase GDP to $350 Billion, which is fairly close to what this study suggests.

Inflation index and combined with world averages in increased incomes vs Per Capita Purchace Power Parity, adds up to about a 10 to 1 or 100 to 1 trade ratio on a sliding scale redenomination of 1:1000, if you calculate some factors, I am not going to go into in this thread. I will discuss this more on the Friday Night Series, "Dinar, Fact or Fiction."

Those should come very close to these numbers.

These journalists have no more data than we do.

Hell.... we might even really be far more educated than they are.

End of Enoch Diatribe