The new cash version

[yota691]

The new cash version

Saturday 18 July 2020 238

 

Dr.. In the name of Brahimi

 

Some have recently circulated a proposal to print the new currency or monetary issue, as it is called, in terms of possible solutions to address the financial crisis the government is going through as a result of the Corona pandemic, so can this proposal be implemented? What are the possible consequences if applied? .

In order to clarify the merits of the matter, we point out that the government, through the Ministry of Finance, has two main accounts (in addition to other accounts), the first in dollars in which its external revenues (from oil) are deposited, which constitute up to (95 percent), and the second in dinars, in which its local revenues are deposited (from taxes and fees And other returns) which are within (5 percent).

Thus, when the government wants to pay internal dues, it requests the central bank to transfer from its balance in dollars to its account in dinars, meaning that it buys the dinar from the central bank. The question is what if the financial balance is not sufficient to meet its requirements?

Before the issuance of the Central Bank Law No. 56 of 2004, one of the main solutions was to borrow directly from the Central Bank (overdraft) without the latter having the right to object, but after the issuance of the aforementioned law, this mechanism stopped, and the reason is that the law has prevented The central bank is able to provide direct debt to the government while allowing it to provide indirect debt by re-deducting government bonds in the secondary market, i.e. buying them from banks and not from the government, 

And that is within the framework of the independence granted by this law to the monetary authority, which aims to define the government borrowing process and not to use the latter this policy for political purposes and the issuance of more currency and consequently lower its value as a result of inflation resulting from the increase in issuance, meaning that the law was aimed mainly 

To prevent the improper use of religion.

Accordingly, the new monetary issuance process cannot be implemented before amending the law first, but if this is done, Iraq will lose one of the important achievements after the year 2003 which is the independence of the central bank, and this has a negative impact on the confidence of international institutions and organizations, and its consequences On the credit rating of Iraq, as well as dealing with those institutions and the ability to obtain financial and technical support, as this measure has negative consequences for the process of attracting foreign capital that we aspire to.

Away from all of that, the results that the cash issuance process can achieve do not differ from the indirect lending process initiated by the Central Bank a few days ago by re-deducting government bonds worth eight trillion dinars, but this process remains subject to the approval of the monetary authority and its appreciation of the actual need The size of the crisis and the need for government spending, which calls on us not to compromise the independence of the Central Bank, which is an important economic safety valve and the need to use specialists to deal with the crisis.

[Stubby 1]

thanks for that Yota

[Donziman]

So in other words, since the government is hurting because of lower oil prices

coupled with no business because of covid19  and let's not forget the stealing

by many of the Ministries,  NO RV IN THE FORESEEABLE FUTURE.  imho

[DWS112]

54 minutes ago, yota691 said:

the need to use specialists to deal with the crisis.

So...the Central Bank will perform this new cash release.

[DWS112]

Money needed to perform this new release of currency will be obtained in the same manner as the previous 8 trillion. Thru the use of the Internal Borrowing Law?  (approved by Parliament) - JMO

Edited July 19, 2020 by DWS112

[horsesoldier]

This article is either the biggest load of Smoke, Bollocks &  or these folks are absolutely certifiably clueless & insane.

[screwball]

2 hours ago, Donziman said:

So in other words, since the government is hurting because of lower oil prices

coupled with no business because of covid19  and let's not forget the stealing

by many of the Ministries,  NO RV IN THE FORESEEABLE FUTURE.  imho

Time to sell 

[screwball]

2 hours ago, DWS112 said:

Money needed to perform this new release of currency will be obtained in the same manner as the previous 8 trillion. Thru the use of the Internal Borrowing Law?  (approved by Parliament) - JMO

Yep rate change  draws all the cash in they then loan all the money out out electronically In form of loans app payments and purchases electronic. Called money velocity 

[ronscarpa]

Thanks Yota...and the story continues...!  RON

[3n1]

1 hour ago, horsesoldier said:

This article is either the biggest load of Smoke, Bollocks &  or these folks are absolutely certifiably clueless & insane.

 

who's driving the bus anyways 🤣

 

[horsesoldier]

50 minutes ago, 3n1 said:

 

who's driving the bus anyways 🤣

 

 

Now that's Base Jumping with Attitude

[mr.unlikely]

1 hour ago, horsesoldier said:

 

Now that's Base Jumping with Attitude

Don't you mean Bus jumping?