Adviser to the Prime Minister: Economic policy in Iraq is moving towards implementing the principle of monetary sovereignty

[RJG]

Adviser to the Prime Minister: Economic policy in Iraq is moving towards implementing the principle of monetary sovereignty

 Economy
 

•  Today, 18:16
   

Baghdad - INA
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, confirmed today, Tuesday, that the economic policy in Iraq is moving towards implementing the principle of monetary sovereignty, and while he pointed out that the informal exchange market represents only 10% of circulation, he stressed that the currency cannot be controlled. A country other than the dinar with in-country pricing; Because monetary duality has harmed the economy, he pointed out at the same time that there is a tendency to diversify currencies for travel purposes and not be limited to the dollar.
Saleh told the Iraqi News Agency (INA): “Economic policy in general and monetary policy in particular are moving towards a new principle called (monetary sovereignty), which considers the Iraqi dinar the only refuge for exchange, pricing, and coverage of internal transactions.”
He added, "It is not permissible for the currency of another country whose monetary policy is subject to pricing and trade exchange operations within the Iraqi economy, and the principle of monetary sovereignty starts from this level." 
He continued, "The problem in Iraq is the existence of two exchange markets: the first is the regular one in which exchange takes place through the central bank's platforms, which prices the exchange rate at 1,320 dinars to the dollar as a stable and official price and defends monetary policy." 
He explained, "The second market is irregular, representing 10% of the trading rate. It is an uncontrolled market controlled by speculators and adds noise to the Iraqi economy as a whole." 
He pointed out, "There are two things: The first is commodity diversification, which the government has begun through baskets that support livelihoods, including the food basket that has achieved stability in the prices of materials, as well as the medicine basket, a construction basket, and another basket for reserve materials that the Ministry of Commerce will launch soon. These are financed at the official exchange rate and help... Stabilize prices and counteract the noise introduced by the informal market.” 
He stressed that "dealing in the dollar (dollarization) and its pricing of the internal economic movement is what is most harmful to the economy, but there is no harm in covering external transactions exclusively and through official platforms." 
Saleh pointed out, “On this basis, government policy and the policy of the Central Bank moved towards not relying on one country’s currency in foreign transactions and diversifying those currencies such as the Emirati dirham, the Turkish lira, the Chinese yuan, the British pound, and the euro, in addition to the dollar. This diversification reduces the dollarization of the economy and gives it great independence.” . 
He stressed, "This diversification can be generalized at the level of selling foreign cash currencies for travel purposes and according to the currency of the country to which one is traveling. This will greatly reduce the demand for the dollar as a single currency in transactions, and the monetary and commodity diversification adds independence to the Iraqi economy."
Regarding Iraq’s steps to provide these currencies, Saleh said, “The monetary authority in Iraq is independent and there is a wide consultation circle between it and the government. This is happening for the first time to open banking arrangements with central banks in countries that have a commercial partnership with Iraq, such as the Emirates, Saudi Arabia, Turkey, and China, and it is possible to cooperate with these countries.” Directly in their national currencies to achieve ease of conversion and exchange to finance trade and the movement of goods, supported by a stable exchange rate of 1,320 dinars, which allows for achieving stability and monetary sovereignty.”
He pointed out, "The demand for foreign currency is linked to the demand for goods and foreign transactions. It is dangerous to use the dollar to cover internal transactions, and monetary double-dealing has harmed Iraq. This must end, and it does not mean not providing foreign currency to citizens for the purposes of financing foreign trade or for the purposes of travel and tourism. Therefore, there are steps." This is a major regulatory change aimed at achieving diversification through agreement with several countries with which transactions are conducted.”
He stressed, "The state has large commercial arms, and whenever it finds that there are needs affected by secondary market noise, the commercial apparatus intervenes to expand its dealings supported by a stable exchange rate, as well as in cooperation with Iraqi merchants." 
Regarding the government’s steps to strengthen the banking system, the Prime Minister’s advisor said, “There is a large team headed by the Prime Minister that directly supervises the reform of the banking system, and the largest system is the government system, whose assets dominate 85% of the assets of the banking system in Iraq, so the reform begins with government banks.” We are working on this seriously, and during the next 6 months the results of this reform will appear, and there will also be work in parallel to reform the private banking system, and there is a strong movement and cooperation in this direction with the associations of private and Islamic banks.”
He stressed, "The Prime Minister's philosophy confirms that economic reform cannot be achieved without reforming the banking system, and therefore the priority begins with reforming the financial system."


https://www.ina.iq/198185--.html

 

LIKEDISLIKE

[rvmydinar]

Please , no more talk, talk , and talk about " monetary policy " and just do it Quietly because usually more talk means more delays for whatever reason.

[Laid Back]

Monetary sovereignty is the power of the state to exercise exclusive legal control over its currency, broadly defined, by exercise of the following powers: Legal tender, the exclusive authority to designate the legal tender forms of payment.

 

“Government policy and the policy of the Central Bank moved towards not relying on one country’s currency in foreign transactions and diversifying those currencies such as the Emirati dirham, the Turkish lira, the Chinese yuan, the British pound, and the euro, in addition to the dollar. This diversification reduces the dollarization of the economy and gives it great independence.” 

Go monetary sovereignty 

Go Stronger Dinar

 

[screwball]

7 hours ago, Laid Back said:

Emirati dirham,

i see the UAE today announced stop trading in USD.....was on twitter

[screwball]

What’s interesting this announcement came at a time when the UAE were getting connected the Iraq Central Bank! It’s all about timing and no such thing as a coincidence!

[southbeach]

Praise Jesus

[RJG]

Iraq is moving towards implementing the principle of monetary sovereignty.. What does this mean?

Moaz Fraihat - Washington

November 30, 2023

 

 

The exchange rates of the Iraqi dinar against the dollar face fluctuation. Archive

Monetary policy in Iraq faces many challenges, especially in light of the presence of an irregular currency exchange market run by networks that manipulate the prices of the dollar against the dinar, according to local media reports.

In the face of "monetary dualism" that has harmed the country's economy, Iraq is moving towards applying the principle of "monetary sovereignty," according to what the financial advisor to the Prime Minister, Mazhar Muhammad Salih, revealed in statements to the Iraqi News Agency, "INA . "

By applying the “principle of monetary sovereignty,” according to Saleh, “the Iraqi dinar becomes the only resort for exchange, pricing, and coverage of internal transactions.”

The Iraqi authorities are struggling in an attempt to control the exchange rate of the Iraqi dinar against the US dollar, which is witnessing fluctuations that have led to a decline in the value of the dinar, accompanied by compliance with international rules in financial transfers, which has affected the supply of the dollar in the market.

What does it mean to apply the principle of "monetary sovereignty"? 

The economic advisor, Saleh, explains in a research paper published by the Iraqi Economists Network last October that monetary sovereignty is called “Westphalianism,” which expresses “the state’s authority to exercise exclusive legal control over its currency through the functions of the central bank, as it is the exclusive authority to determine the quantities of the transaction and its value as a means of payments.” .

He added that the name "Westphalianism" comes from the "Westphalian system, which represents a principle in international law that every state has exclusive sovereignty over its territory," which is explicitly stipulated in the United Nations Charter.

The research states that this “Westphalian monetary” sovereignty is based on: the independence of monetary management, issuance, and exchange system.

Why now does Iraq need to implement such a principle?

According to the research paper, Saleh believes that Iraq needs to apply the principle of monetary sovereignty in order to enhance the ability of monetary policy to “control local liquidity levels through the strength of the central bank’s intervention in the monetary market.”

He warned of the continuation of what he called “the reality of colored noise that allows the survival of the black market for the monetary dollar” and its ability to influence the price system, not to mention greater availability of the state’s ability to manage inflation by influencing it through interest rates.

Saleh stressed that the Iraqi state’s adoption of the principle of monetary sovereignty will lead to “maintaining a fixed exchange rate that allows free capital flows and confronting cheap money.”

The Iraqi General Directorate of Intelligence and Security had announced the overthrow of a network that manipulated the dollar exchange rates in Baghdad, according to a report published by the " INA " agency.

Last August, Prime Minister Muhammad Shia al-Sudani announced the arrest of a network of currency “speculators” who collect dollars and send them to the Kurdistan region in northern Iraq, and then smuggle them abroad, without specifying the destination, according to an Agence France-Presse report.

Factors for applying the principle of monetary sovereignty?

The Iraqi economist, Salam Sumaisem, identified the most important factors that allow the application of the principle of “monetary sovereignty,” stressing that it is not linked to the existence of a political decision to implement it, but rather to economic factors and determinants.

In an interview with Al-Hurra website, Sumaisem laid out a package of factors that must be present, including: “the strength of the economy, the stability of exchange rates, the strength of the national currency itself, and the existence of a truly productive economy that does not rely solely on imports.”

Despite the authorities' attempts to control exchange rates, trading in the informal market still represents about 10 percent of the trading rate, in what Counselor Saleh described as "an uncontrolled market controlled by speculators and adding noise to the Iraqi economy as a whole."

Will it affect deposits in foreign currencies?

The Iraqi economist, Mahmoud Dagher, explains that the principle of monetary sovereignty “does not mean that the savings of citizens or any legal entity that has funds deposited in foreign currencies will be affected, as they remain able to deposit and withdraw funds in dollars or other foreign currencies that may be deposited in them.”

In response to Al-Hurra website's inquiries, he pointed out that the majority of countries seek or aspire to reach "monetary sovereignty" by making "their national currency the primary currency to be used in payments and transactions within the country."

Applicability of the principle of monetary sovereignty in Iraq?

Iraqi economists unanimously agreed that applying the principle of monetary sovereignty requires the availability of several factors, the most important of which is “bridging the gap between the exchange rate of the national currency against the dollar.”

Expert Dagher, a former official in the Central Bank of Iraq, said, “Whenever the exchange rates of the national currency stabilize against foreign currencies, the principle of monetary sovereignty becomes applicable,” which must be accompanied by “the absence of a gap or differences between the exchange rates in the official market and the parallel market, and preventing what happens.” Of speculation in this field.”

Expert Sumaisem confirms that every country has the right to resort to the principle of “monetary sovereignty” in order to control the “money market,” adding that “this matter is not only related to desire or ambitions, but rather to the strength of the national currency in real terms, as the currency is not just paper, it is “It must express a value corresponding to the GDP, and its ability to truly store value, while being coupled with various indicators of strength at several levels.”

Iraq began applying the standards of the international transfer system "SWIFT" since mid-November of 2022 to access Iraq's dollar reserves in the United States, which are estimated at tens of billions of dollars, according to Agence France-Presse.

Iraqi banks must currently register their transfers in dollars on an electronic platform, which checks the requests, and the US Federal Reserve examines them, and if it has doubts, it stops the transfer.

https://www.alhurra.com/business/2023/11/30/العراق-يتجه-نحو-تطبيق-مبدأ-السيادة-النقدية-يعني-؟

 

[Officiallytook]

I like a ton of articles right now!

[dinarham]

   Yep . US still holds the purse strings , but this will come to an end , per the Strategic Framework Agreement , if the US will still  honor this agreement . As far as the electronic platform  ,I am of the belief that even the lower denoms will be included on this platform.. The printing of lower denoms is too massive of a secret to hold , as the printing and distribution would involve hundreds of people . An image of a lower denom would already  have been leaked 

[Officiallytook]

3 hours ago, dinarham said:

   Yep . US still holds the purse strings , but this will come to an end , per the Strategic Framework Agreement , if the US will still  honor this agreement . As far as the electronic platform  ,I am of the belief that even the lower denoms will be included on this platform.. The printing of lower denoms is too massive of a secret to hold , as the printing and distribution would involve hundreds of people . An image of a lower denom would already  have been leaked 

Definitely like the way your thinking

[screwball]

On 11/29/2023 at 5:09 AM, RJG said:

diversify currencies for travel purposes and not be limited to the dollar.

This means FOREX

[screwball]

7 hours ago, RJG said:

By applying the “principle of monetary sovereignty,” according to Saleh, “the Iraqi dinar becomes the only resort for exchange, pricing, and coverage of internal transactions.”

Love this