Billion, the central bank: reserves necessary funds or frozen?

[yota691]

Billion, the central bank: reserves necessary funds or frozen?

Central Bank of Iraq has succeeded after the re-founded in 2004 in a substantial increase in foreign cash reserves, which exceeded the recent barrier sixty billion dollars. It seems like a large amount of Iraqi standards, especially as the burden of Iraq was burdened with even a few years ago foreign debt of more than $ 100 billion. But he remains modest even compared with some countries in the region such as Saudi Arabia, Algeria, United Arab Emirates, not to mention China and Japan. However, this amount enough to shed the saliva of certain forces within the government and that dream of seizing him and spend it in an appropriate manner. The professor asked Maytham Laibi page editor of the world economic newspaper on March 8 / March 2012 a number of questions about the functions of these reserves and the optimal size required to maintain the stability of the economy and situations that justify the resort to them. It should be important aspects Balaguetsadaan Iraqis fight a wide debate around it. Before answering questions Maytham and coffee must first be discussed briefly to the emergence of these sources of official reserves and its constituent elements. Known as the official cash reserves and liquid foreign assets that appear on the assets side in the budget of the Central Bank. Consists primarily of foreign currency balances (mainly the dollar and the euro and the pound sterling), as well as stocks of gold and other precious metals, as well as special drawing rights and other quasi-money convertible. Because of sharp fluctuations in exchange rates turn the Iraqi Central Bank to keep the bulk of the cash reserves divided equally between the dollar and the euro. The increase in these assets primarily to the surplus in the balance of payments, specifically in the trade balance caused by the surge in oil prices since 2003. In theory can contribute to tourism and other services and remittances from abroad to raise the balance of foreign currency.

Despite the recovery of religious tourism, it is unlikely that it played an important role in this area in Iraq. There is a third factor in the movement of capital across borders, which could result in foreign direct investment to pump liquidity in foreign currency to the domestic market. However, most of these investments are spent on the purchase of imports from abroad, which means that their impact is limited to official reserves in the country. Can also be the policy of the Central Bank of the same affect on the size of foreign reserves. In some countries, including China, for example the central bank resorted to offering local currency and buy foreign currency in order to keep the low rate of exchange for local currency in a deliberate move aimed at encouraging Chinese exports. Which is unlikely in Iraq, where the policy is virtually the opposite. In addition to the above factors there is a special factor is linked to the Iraqi situation and difficult to quantify and is the current expenditures of U.S. forces and entities associated with them until the end of 2011. Was the U.S. Army and U.S. Development Agency and others during the past years, regardless of hundreds of millions on contractors, contractors and local officials and employees of the Awakening and the tribal leaders in different regions and under many names. Has also devoted a lot of money to promote the local economy and small and medium enterprises and to support non-governmental organizations and others. Regardless of the feasibility of these projects has certainly contributed to improve the presentation of foreign currency in the domestic market because the payment was in dollars. According to the above must be emphasized that the first sixty billion owned by the central bank is not directly related to the state budget did not accumulate as a result of government policy or because of the financial surplus money in its budget. Foreign Valahtiattiyat is purely a monetary phenomenon may not be mixed with the financial aspects of the call for recruitment to fill the fiscal deficit of the government. It also must be said that such calls are totally contradicts with the Central Bank Law, which prohibits a bank to provide any credit directly or indirectly to the government or one of its institutions. And the existence of such a red line is very important so as not to come back again to the mistakes of the past, where monetary policy has been just added to the fiscal policy and serves mainly short-term goals of the government without regard to the disastrous long-term effects on development. It should be noted here that the success of the Central Bank in the management of official reserves and their development is a practical response to the accusations launched against him and sometimes bear responsibility for what is described as a "drain" the wealth of Iraq and "smuggling" money raised through foreign currency in the weekly auctions. It is also proof of the error calls for a return to impose unjustified restrictions on foreign exchange dealings in Iraq. However, the granting of recognition of the central bank the sole right to dispose of foreign reserves does not prevent discussion and question about determining the optimal size required of them and ways to handle it and invested for the benefit of the Central Bank and the national economy. In all cases, must be the size of foreign reserves sufficient to maintain the stability of the national currency and to meet any emergency in the balance of payments. The main basic functions of cash reserves to secure financing for imports for a period of time in ensuring country's creditworthiness and ability to repay its financial obligations, as well as granting the central bank could intervene in currency markets to maintain a stable exchange rate of national currency, in addition to providing a source of income additional to the Central Bank itself. Certainly the performance requirements of these functions vary from one country to another. And generally do not typically found a relationship between the country's economic power on the one hand and between the size of its reserves of cash on the other hand, noting that industrialized countries need relatively lower reserves of emerging and developing countries. With the exception of Japan does not maintain the developed countries, particularly the United States, Germany, Britain and the rest of the EU countries large foreign reserves, as is the case in China, Russia, Taiwan, Saudi Arabia and others. Due to the fact that the first group have the coins in circulation in the global money markets and companies can resort to the financial markets without any hindrance. This applies in particular to the United States that reap great benefits from the role of the dollar as the currency and global head of acceptable means of payment in all parts of the world and a haven for investment. If the general rule says that the volume of cash reserves in the industrialized countries should be enough to finance imports of at least three months, this rate is increasing in developing countries, including Iraq because the local currency is limited trading in the world. On the other hand there is no certain proportion between the size of foreign reserves with the central bank and the amount of money circulating in the country concerned. Such a cover has become a practical thing of the past decades is no longer commensurate with the nature of the credit monetary system. It is true that there is a direct correlation between the size of these reserves and the confidence in the national currency, but this trust depends ultimately on the performance of the national economy and stability in the long term. With other functions of official reserves into account could be argued that the current size of these reserves in Iraq than the actual need and projected them. This is because according to my conservative policy adopted by the Central Bank of Iraq, which is based on giving priority to the principle of prudence and caution. However the importance of this principle, but there is no legal impediment or economic prevents the central bank from the investment of these reserves or part of the way that the maximum profit it and contribute in strengthening the capital of the Central Bank and its role as a lender of last resort, in addition to supplement the budget with additional resources. There is also no strong justification for the continuation of the policy of the extensive use of these reserves in foreign currency auctions in order to raise the exchange rate of the dinar, in particular that this policy has served its purpose and even succeeded in achieving a significant increase in the value of the national currency. And any further increase could result in negative consequences. Regardless of the size of foreign reserves and how it fits with the needs of the Iraqi economy must confirm the independence of the Central Bank as the only body authorized by law to maintain and manage the official reserves. Does not infringe open field here in front of any other practices under the pretext of emergency and other conditions. It must be said that adherence to such a policy has proved its usefulness in other countries. Fbalaratbat sovereign debt crisis in the euro zone some European officials raised the idea of ​​using reserves, the European Central Bank and national branches in the Member States to expand the umbrella of the so-called rescue (European Fund for the euro). However, this idea was met with officials categorically reject the monetary authorities, especially in Germany where the central bank governor said the German, "Jens Vaidman," that these reserves are non-prejudice.

http://translate.google.com/translate?hl=en&rurl=translate.google.ca&sl=ar&tl=en&u=http://www.alaalem.com/index.php%3Faa%3Dnews%26id22%3D44590 Hope this is not a repeat

Edited March 14, 2012 by yota691

[oleman]

And there you have it. Several people have been stating it was well over 60 Billion. Now if they would just say how much more they really have.

Great post yota.

[Abarvets]

Holy smokes there is a lot here! These two sentence about threw me this morning, along with your highlights of course!

There is also no strong justification for the continuation of the policy of the extensive use of these reserves in foreign currency auctions in order to raise the exchange rate of the dinar, in particular that this policy has served its purpose and even succeeded in achieving a significant increase in the value of the national currency. And any further increase could result in negative consequences.

Where is Stryker? Need more coffee in aisle 6!

[yota691]

And there you have it. Several people have been stating it was well over 60 Billion. Now if they would just say how much more they really have.

Great post yota.

GM Oleman I like the when it state's the First 60 Billion!!, Overall very encouraging article about the CBI !! Try to highlight some more but I rush it!!

Edited March 14, 2012 by yota691

[k98nights]

bump

[yota691]

bump

GM K98 Hope all is well!!

[mrref]

And there you have it. Several people have been stating it was well over 60 Billion. Now if they would just say how much more they really have.

Great post yota.

You know what I really don't think they have any idea how much they have. I know one thing they have a lot more than me.

Edited March 14, 2012 by mrref

[DEESEAN]

Wasn't there estimates that their reserves are around the 90 Billion range? Just asking because i wasn't sure where i read it.... It may ahve been a rumor, who knows.

[Elixirbaby]

Thanks yota and ab.

[Dinarduo]

Nice find Yota - thank you! It sure would be nice to know how many billions they actually do have. A lot of people stick to that 60b number like it's gospel and refuse to believe the RV could be much more than .01 - .10 based on it. We now know it is higher so I'm even more excited (if that's even possible) to see what the "coming days" bring! Thanks Yota +1 to you!!!

[yota691]

Wasn't there estimates that their reserves are around the 90 Billion range? Just asking because i wasn't sure where i read it.... It may ahve been a rumor, who knows.

Abtan: Iraq has (90) billion dollars in central bank reserves

On: Saturday 03/09/2011 12:38

Baghdad (news) .. the committee said that Iraq's parliamentary Ghaderaly improve the status of the dinar and adopt it as part of international reserves, noting that Iraq has more than (80 to 90) billion dollars in central bank reserves and this is positive for the benefit of the Iraqi dinar.

A member of the Committee of Economy and Investment parliamentary and MP / National Alliance / Hussain Abtan in a statement to write to the Agency (news) said on Saturday: "It is certain that Iraq is able to adopt the dinar as part of the reserves of international and especially since he has a big supplier in the field of oil and more than (80 to 90) billion in Central Bank reserves and this influences positively on the Iraqi currency against the dollar and make the dinar as its currency position as they were formerly among the world's currencies. "

He called on the Central Bank Alabtan improve the status of the dinar against the dollar, and the (1200) dinars to the dollar is not the right thing. "

It is noteworthy that the central bank adviser said in an earlier statement "of the Agency news" that the Iraqi dinar is not an international reserve currency to be dealt with abroad, saying we as policy cash aspire to be the Iraqi dinar portion of the reserves and this needs a long time.

Saleh said: The Iraqi dinar is the local currency freely convertible into other currencies, ruling that is treated in Iraqi dinars externally at present evidence is that the bank instructions Antrzelatzmh taking out the Iraqi dinar, but the limits of (200) thousand dinars for the traveler. / End / 12. N. P. /.

http://translate.google.com/translate?hl=en&prev=/search%3Fq%3Dnahrain%26hl%3Den%26client%3Dfirefox-a%26hs%3Dbh9%26rls%3Dorg.mozilla:en-US:official&rurl=translate.google.com&sl=ar&u=http://www.ikhnews.com/news.php%3Faction%3Dview%26id%3D19443

[DEESEAN]

Yota you are too good. What is more bad a$$ than a news hound? Cause we need to change you to that sir.

[Papster]

Wasn't there estimates that their reserves are around the 90 Billion range? Just asking because i wasn't sure where i read it.... It may ahve been a rumor, who knows.

your right there was an article a while back that stated their reserves were at 90 billion...........GO DINAR

[Dinarduo]

Yota you are too good. What is more bad a$ than a news hound? Cause we need to change you to that sir.

I 2nd that motion!!! Pretty sure DV needs to put him on the payroll!

[yota691]

Nice find Yota - thank you! It sure would be nice to know how many billions they actually do have. A lot of people stick to that 60b number like it's gospel and refuse to believe the RV could be much more than .01 - .10 based on it. We now know it is higher so I'm even more excited (if that's even possible) to see what the "coming days" bring! Thanks Yota +1 to you!!!

The Lopster talk about 60, you not heard that from me!! ty

[Biker]

Good work Yota, i feel they need to spread the LOVE, GO RVVVVVVVVVV

[Stryker365]

which exceeded the recent barrier sixty billion dollars. way above this amount IMO and could be in the 100's of billions and this is why we are seeing them to step up here lately. IMO Iraq thought that the good old USA was just going to turn over the keys to them, meaning release of Chapter VII and they were going to play in the big boy sandbox. Well as we can see that didn't happen so now they have to get the horse saddled, sorry the camel saddled and get this rodeo on......meaning the Arab Summit.

Consists primarily of foreign currency balances (mainly the dollar and the euro and the pound sterling), as well as stocks of gold and other precious metals, as well as special drawing rights and other quasi-money convertible. Because of sharp fluctuations in exchange rates turn the Iraqi Central Bank to keep the bulk of the cash reserves divided equally between the dollar and the euro.......NICE....NOT IN THEIR FINANCIALS...IMO...

BTW do not believe any of their financials or the people that believe in them, They are not correct and the one that told me that hands down knows what he is talking about....

In addition to the above factors there is a special factor is linked to the Iraqi situation and difficult to quantify and is the current expenditures of U.S. forces and entities associated with them until the end of 2011. Was the U.S. Army and U.S. Development Agency and others during the past years, regardless of hundreds of millions on contractors, contractors and local officials and employees of the Awakening and the tribal leaders in different regions and under many names. Has also devoted a lot of money to promote the local economy and small and medium enterprises and to support non-governmental organizations and others.

Now I understand much better when they say it like this, instead of like this; may be caused by our troops leaving...all the funds went with them accoording to this anyway. For re-construction, contractors that where spending money on projects no wonder Shabibi is trying to get these dummies in line because the system is about to breakdown around itself...running out of both USD & IQD. Hard to control your monatary system isn't it there... Shabibi......

Need more coffee....

Edited March 14, 2012 by Stryker365

[Carrello]

Thank you, Yota, very much. They stick like glue to the nmber, 60 billion, but then can say they believe the reserves to be 80 to 90 billion. Okay, but that is a big swing, and even a variable of 10 billion dollars is a whole lot of money not to know exactly what the real number is.

Yota, if you had an extra grand or so sitting around today, would you check in at the window for another million?

[DEESEAN]

There is the Stryker break down I have been waiting foor.

Well done my friend.

[RVPleaseToday]

This article is from an "Iraq economic expert in Germany. "

There are articles written every day in this country saying what the writer thinks the FED should do, but in the end, the FED acts independently of those expressing these opinions. There seems to be a lot of articles written daily in Iraq about what the CBI should do, but in the end, the CBI acts independently.

Just for perspective, I think we need to remember that most of what we see is just the back and forth of politics within Iraq and has little to do, just as these kinds of articles in the U.S., with what the CBI will actually do.

In a general sense, it should be no surprise that there are people who disagree with Shabbs policies that would write articles suggesting he is managing things wrong.

Edited March 14, 2012 by RVPleaseToday

[JustNTime]

GM DV!

Great News to start day with, thanks Yota!

and thanks for them highlights, it helps to get day started.

Edited March 14, 2012 by JustNTime

[oleman]

You know what I really don't think they have any idea how much they have. I know one thing they have a lot more than me.

Me and you both

[sonny1]

like i have stated before many many times, the number is between 95-110 billion, maybe more.

[fnbplanet]

I'm still looking for that $250 Billion DFI fund that they were talking about on June 30th of last year.......

[truthful1]

One of the articles shows 90 billion, yet the cbi site shows 60 billion. thats at least 50%more than what their data reflects. does anyone still want to defend the cbis stats??? More proof of an undervalued currency