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Banking merger


yota691
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How is the exchange rate stable?

Sunday 12 September 2021 323How is the exchange rate stable?

 
Yasser Al-Metwally 
 
The exchange rate of the dollar against the dinar stabilized at a price of 148 thousand dinars compared to the 100 dollars against the official price after raising it at the price of 145,000 dinars, and it is still slightly high.
The question is what is the reason behind this stability?
I see that the main reason behind this stability is due to the application of the theory of supply and demand for the first time in Iraq.
The effects of the inflation that occurred due to the sudden change in the exchange rate became evident on the reality of the standard of living on all members of society without exception, even in varying proportions.
And the poor segment was the most affected, and then followed by the middle class of retirees and employees, who are the vast majority in the country.
One of the effects of inflation is the clear deflation, as the demand for most commodities decreased and cast a shadow on the market.
Thus, there was a somewhat slowdown in the import process due to the weak demand, followed by a slight decrease in the demand for the dollar, so you find price stability evident these days.
The objective of controlling the outlets and preventing the import of some commodities may have other partial effects on the stability of prices.
This reality brings us back to the concept and role of consumer culture in the process of balancing prices in the market, how?
If we have the ability to adopt a consumer culture that limits the apparent wastefulness in our consumer behavior, we will contribute to maintaining price stability. This means that government measures alone are unable to control the pace of prices unless accompanied by a balanced consumer culture by sacrificing some needs for a while, which will limit the The huge demand for hard currency with the aim of stabilizing the price and reducing it to less than the official rate.
The second thing that will help to stabilize the exchange rate is for government agencies to control currency smuggling, and this matter needs great capabilities.
Regarding the return of the official price to its previous era, I do not see the possibility of this in the short term. Rather, it needs time until the government controls the payment of its debts and the monetary reserve remains at the internationally accepted limits.
For this, the citizen must deal with this reality and arm himself with a solid consumer culture that helps him and the state to achieve stability.
We are also approaching a new stage after the elections, even if the picture is not yet clear until a new government is chosen and awaits its economic program, which will define the features of the stage and allow economists and analysts to determine the stages of stability and propose solutions to return prices to their previous era and stability to become parallel to the value of the Iraqi dinar.
Waiting for how things will turn out, then every incident will have a talk, we will watch to see.
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20 hours ago, yota691 said:

We are also approaching a new stage after the elections, even if the picture is not yet clear until a new government is chosen and awaits its economic program, which will define the features of the stage and allow economists and analysts to determine the stages of stability and propose solutions to return prices to their previous era  

"  We are also approaching a new stage after the elections  ", sounds too good to be true, but for now on, let's wait and see how it turns out.

 

"  return prices to their previous era  ", just wonders what previous rate  would that be? 3.22 usd? i still have a doubt that they will return the rate to 1190.

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The yuan and the dollar

Sunday 19 September 2021 201The yuan and the dollar

 
Yasser Al-Metwally 
 

China said that the world should prepare from now on to buy our goods in Chinese yuan, and the decision will be implemented after a month.

This remarkable early warning raises several questions, including: Will the yuan affect the value of the dollar? Or, in other words, will the Chinese currency replace the US currency?
It is known that global trade as a system through which the global market deals in dollars (fixed pricing), and on this basis, economists find it difficult for the Chinese yuan to replace the dollar or affect its value in the short and medium term.
This came during a discussion with someone in this regard, but he added that the Chinese yuan could affect the value of the dollar in the long run.
I found in this vision tangible facts on the ground, based on the speed of economic growth that China is leading over all global economies, and if this growth continues at a rapid pace as it is happening now, the yuan may outperform the dollar in the long run.
I find here in the Chinese decision and its new approach that it used its cunning in order to raise the value of its currency (the Chinese yuan) by imposing its currency in trade exchange operations, and thus will create a price balance with the dollar in the medium term.
The reason we expect the yuan to be able to compete with the dollar in the long run is that it follows the transactions of the oil market globally until China is able to contain all oil-exporting countries in accepting cooperation in the Chinese yuan, of course it needs a period of time, if it manages to acquire the oil market, and this depends Who will win the big fight next?
What is the extent and size of the implications for the Iraqi economy?
The percentage of Iraqi trade dependence on Chinese goods and commodities is
 75 - 80% of the Iraqi market imports. This means that the impact of the Chinese decision to impose its currency will be the largest on Iraqi trade. In other words, the demand for the Chinese yuan will rise to the equivalent of the dollar, or they will gradually share the demand for them between the short and medium term stages.
Here, those in charge of monetary and fiscal policies must take into account the extent or size of the impact on the national economy as a result of this sudden decision, so as not to enter into the cycle of providing the two currencies in parallel with the demand for them.
The private sector, with its commercial and banking sectors, will be the one that will be most affected by this transformation, and it has to deal with the expected effects of this measure.
I expect that if the Chinese decision is implemented so quickly, it will cause chaos in the Iraqi market at first, and it is required to address it in advance.
For this reason, we said that Iraq needs to diversify its dealings with the countries of the world according to its interests; Because the struggle of adults continues in all aspects of life, and we have to play with adults.
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Banking merger

Sunday 26 September 2021 274Banking merger

 
Yasser Al-Metwally 
Finally, the private banking sector was able to achieve a banking merger between two banks, with the aim of the financial leverage required by law in order for the central bank to allow the late bank to raise its capital to the limits approved by law, amounting to 250 billion dinars.
It is noteworthy that a not small number of newly established private banks are faltering to reach the capital determined by the Central Bank.
The circumstances were unfavorable for the implementation of the merger in the past, which prompted the Central Bank to postpone the cancellation of the license for the establishment of troubled banks.
Regardless of the coercion of the decision from its realism, we are addressing the issue from the standpoint of the advantages of banking merger, which has proven successful in many developed countries of the world.
The merger decision contributes to achieving the goals and advantages of the merged banks, as apart from the goal of raising capital, it will combine the expertise possessed by the merged banks.
Moreover, the most important feature is that the merger will achieve effective governance for the management of the bank that resulted from the merger. How?
As the public bodies and boards of directors will seek to choose the efficient administration from among the two banks, this is first.
As for the second advantage, which is no less important than the rational management of the bank, the supervision of the bank's performance will certainly multiply through the partnership between the two banks. 
With these two advantages, the dominance of the owners over the decisions of the board of directors will vanish through the diversity of members.
The merger decision comes as part of an important reform plan for the decision to convert some banking companies into banks, as many of them stumbled in their ability to raise their capital, which puts them between the decision to merge or the decision to cancel the establishment license.
From our point of view, as analysts and observers, we find that the trend towards merging is a correct step, provided that there are incentives provided by the Central Bank to the merging banks to encourage them to merge.
It is useful to note that the major Gulf banks resorted to banking merger in order to acquire the financial market, competition and investment.
One of the most prominent challenges of banking integration in Iraq is a factor related to the failure to absorb the waiver of the status of the sole and dominant owner of decisions that often impede the growth and development of performance
 banking.
Frankly and transparently, we say that the stage of competition has begun, the provision of banking services, their diversity, and the lack of dependence on a single product (the currency window).
This requires rational management that is able to mitigate the severity of potential risks. In sum, the goal for which the banks were established, which is customer service, has returned to continue giving.
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Zero Equation

Sunday 17 October 2021 107Zero Equation

Yasser Al-Metwally 
 

We did not know why the zero-sum equation appears before us with each beginning of a new era, and I mean a new government, because it erases every effect, no matter how useful or not, from the previous one.

It seems that the phenomenon of ego accompanies everyone who confronts responsibility to find the truth in him alone.
This procedure costs the state a lot of time and delays in providing achievements. Therefore, the zero equation was and still is a major obstacle to any solution to the economic challenges facing our national economy. The reason is that any zero-sum beginning of reform weakens the hope of achieving it, because it erased previous attempts. 
actual.
On this basis, the gap has become wide between us and countries in the field of economic development, and this appears even in countries that do not possess the qualifications of economic development, such as the one in Iraq, but the zero equation is what stands as a stumbling block
 for growth.
Now that we are entering a new era after the elections are over, we will watch to see if this era will start from scratch and wipe out all serious attempts to achieve reform?
If we want to read the scene clearly, we must follow the path of the new economic program. If it is built on the basis of completing what was started before, this means that the beginning is correct, and if we start from scratch, the path of reform will be complicated.
Let us be optimistic at the outset in the possibility of fulfilling the promises of change in the new path and work to save the country's economy and put it on the right paths, and this has high requirements and costs, including which we mention.
Institution building and sound institutional performance in the setting of wise and specialized management and technical restructuring of institutions by placing the right man in the right place. A will and ability to make this change is required by adopting the competencies and specializations, each in his place.
The other point that I highlight is the necessity of defining and adopting a specific economic approach with its laws, and of course in accordance with the country's constitution.
The other thing is to rid the state of its dominance over the failed and costly production companies and factories and open the way for the private sector to manage them in order to activate the productive sectors, provide job opportunities and diversify 
Revenues .
Aspirations and aspirations, in the hope that it will find its means in dealing with the complex situation of the country's economy.
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