Defending Iraq monetary policy

[ijdk]

http://************.com/2012/08/14/cbi-defends-its-monetary-policy-and-the-dollar-auction-sale/

Defended the central bank policy followed by the previous years with regard to monetary policy used and the Central Bank auction.

A statement of the bank that “monetary policy followed by the Central Bank since 2004 and until now, policy is very successful and led to a reduction in inflation from 50 percent to 5.8 percent and falling prices and stability.”

He said that “After the low rates of inflation to the extent accepted by the bank to cancel all of these materials except for deposits of order seven days of the Iraqi dinar only to encourage banks to grant credit for industrial projects, agricultural and residential. “

She explained that “monetary policy was welcomed by the International Monetary Fund and praised it.” He said the bank in his demonstration that the “terms of sale dollar to the banks are a tool of monetary policy aimed at the withdrawal of liquidity from the market as is the case in which the majority of the world’s central banks.

http://bit.ly/MtVTaN-************

What does this mean, withdrawal of liquidity?

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[Markinsa]

What does this mean, withdrawal of liquidity?

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Market liquidity

From Wikipedia, the free encyclopedia Jump to: navigation, search "Liquidity" redirects here. For the accounting term, see Accounting liquidity.In business, economics or investment, market liquidity is an asset's ability to be sold without causing a significant movement in the price and with minimum loss of value. Money, or cash, is the most liquid asset, and can be used immediately to perform economic actions like buying, selling, or paying debt, meeting immediate wants and needs.^[1] However, currencies, even major currencies, can suffer loss of market liquidity in large liquidation events. For instance, scenarios considering a major dump of US dollar bonds by China or Saudi Arabia or Japan, each of which holds trillions in such bonds, would certainly affect the market liquidity of the US dollar and US dollar denominated assets. There is no asset whatsoever that can be sold with no effect on the market.

An act of exchange of a less liquid asset with a more liquid asset is called liquidation. Liquidity also refers both to a business's ability to meet its payment obligations, in terms of possessing sufficient liquid assets, and to such assets themselves.

Liquidity is defined formally in many accounting regimes and has in recent years been more strictly defined. For instance, the US Federal Reserve intends to apply quantitative liquidity requirements based on Basel III liquidity rules as of fiscal 2012. ^[2][3] Bank directors will also be required to know of, and approve, major liquidity risks personally. Other rules require diversifying counterparty risk and portfolio stress testing against extreme scenarios, which tend to identify unusual market liquidity conditions and avoid investments that are particularly vulnerable to sudden liquidity shifts.

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[Dalite]

http://************.com/2012/08/14/cbi-defends-its-monetary-policy-and-the-dollar-auction-sale/

Defended the central bank policy followed by the previous years with regard to monetary policy used and the Central Bank auction.

A statement of the bank that “monetary policy followed by the Central Bank since 2004 and until now, policy is very successful and led to a reduction in inflation from 50 percent to 5.8 percent and falling prices and stability.”

He said that “After the low rates of inflation to the extent accepted by the bank to cancel all of these materials except for deposits of order seven days of the Iraqi dinar only to encourage banks to grant credit for industrial projects, agricultural and residential. “

She explained that “monetary policy was welcomed by the International Monetary Fund and praised it.” He said the bank in his demonstration that the “terms of sale dollar to the banks are a tool of monetary policy aimed at the withdrawal of liquidity from the market as is the case in which the majority of the world’s central banks.

http://bit.ly/MtVTaN-************

What does this mean, withdrawal of liquidity?

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Central Banks, as pointed out in the last line, maintain a balance of liquidity to keep inflation in check.

Too much money on the street chasing too few products, causes the price of products to increase, due to inflation.

To solve this, the Central Bank will contract the money supply. I believe the article refers to having the banks maintaining a seven day supply of dinar, to encourage lending.

In the second quarter, according to articles today, the CBI absorbed 12.5 trillion dinar. With this in mind, if this is simply being withdrawn and held by the CBI then in this year at that rate, they will withdraw 50 trillion of dinar from a circulation of 30 something trillion.

You cannot subtract 50 from say 35 and get a positive number.

More realistically, the dollars paid to the GOI for oil are exchanged to the CBI for dinar to pay salaries and run the government. When that dinar gets spent into the economy, it is drawn back in so the CBI will have dinar to exchange to the GOI on the next round.

With a dual currency economy, each bank must have both dollars and dinar. As has been said before, it is "wax on, wax off".

In order for the CBI to withdraw liquidity, and simply hold it, their Foreign Reserves would have to decrease on a direct relationship to the value of the Dinar withdrawn.

I cannot say that the CBI has not been contracting the money supply by making adjustments to the available money supply, but the growing Foreign Reserves would indicate rather small adjustments are being made.

Maybe someone else can add to, or make corrections to this train of thought.

The bottom line, the CBI cannot withdraw from circulation more Dinar that are in circulation. At some point, they would be trying to take something from nothing, if that were the case.

[MrFnHappy]

Central Banks, as pointed out in the last line, maintain a balance of liquidity to keep inflation in check.

Too much money on the street chasing too few products, causes the price of products to increase, due to inflation.

To solve this, the Central Bank will contract the money supply. I believe the article refers to having the banks maintaining a seven day supply of dinar, to encourage lending.

In the second quarter, according to articles today, the CBI absorbed 12.5 trillion dinar. With this in mind, if this is simply being withdrawn and held by the CBI then in this year at that rate, they will withdraw 50 trillion of dinar from a circulation of 30 something trillion.

You cannot subtract 50 from say 35 and get a positive number.

More realistically, the dollars paid to the GOI for oil are exchanged to the CBI for dinar to pay salaries and run the government. When that dinar gets spent into the economy, it is drawn back in so the CBI will have dinar to exchange to the GOI on the next round.

With a dual currency economy, each bank must have both dollars and dinar. As has been said before, it is "wax on, wax off".

In order for the CBI to withdraw liquidity, and simply hold it, their Foreign Reserves would have to decrease on a direct relationship to the value of the Dinar withdrawn.

I cannot say that the CBI has not been contracting the money supply by making adjustments to the available money supply, but the growing Foreign Reserves would indicate rather small adjustments are being made.

Maybe someone else can add to, or make corrections to this train of thought.

The bottom line, the CBI cannot withdraw from circulation more Dinar that are in circulation. At some point, they would be trying to take something from nothing, if that were the case.

On the money Dalite.

Per the article, the CBI is doing what every other CB is doing, there is nothing special going on in Iraq...

She explained that “monetary policy was welcomed by the International Monetary Fund and praised it.” He said the bank in his demonstration that the “terms of sale dollar to the banks are a tool of monetary policy aimed at the withdrawal of liquidity from the market as is the case in which the majority of the world’s central banks.

Read more: http://dinarvets.com/forums/index.php?app=forums&module=post&section=post&do=reply_post&f=5&t=125800&qpid=1012738#ixzz23ZTIHL5u

[MrFnHappy]

LMAO, I love the "negs" without any rebuttal. Just lash out at anything that you don't agree with, or that dashes your dreams....heck, I didn't even write the article, just pointing out what was said. How childish.

Edited August 15, 2012 by MrFnHappy

[fastarnie]

LMAO, I love the "negs" without any rebuttal. Just lash out at anything that you don't agree with, or that dashes your dreams....heck, I didn't even write the article, just pointing out what was said. How childish.

Maybe your just too FnHappy, but I got you back to even.

[WorkerBee]

LMAO, I love the "negs" without any rebuttal. Just lash out at anything that you don't agree with, or that dashes your dreams....heck, I didn't even write the article, just pointing out what was said. How childish.

It’s ridiculous I know, I evened you out.

[MrFnHappy]

Thanks guys/gals.