If the dinar becomes a reserve currency

[USASHABIBI]

ahhhh......this very good for iraq

[keepmwlknfny]

Ok. I see your POV. But I have always thought that the value of any NEW currency they print has got to get its value from somewhere. I believe it will come from the notes we hold now... After RV. I don't think they can just print a new note and say "ok, the old notes are worth the same as the new ones".... I guess they COULD... But I don't see it going down that way.

The new currency will get its value from the foreign currency reserves held in the CBI.....thats what backs the value of the currency now....

So when you swap the currency, and remove the inflated supply as it is now you end up with a higher valued currency, with less out in circulation....

The old notes will never be worth the same as the new notes (exchange rate wise) if they RD....they would just have the same purchasing power in Iraq.....

[tigerstripes]

$58 Billion is roughly what backs the current circulation of IQD as of now. It is 100% liquid assets, meaning, easily converted to other forms of cash.

For every 1,170 IQD - The CBI holds in their foreign net reserves $1 (or its equivilent).

That is how the equations balance out..... Constant factor is the exchange rate (1170 / $0.00086)

Money Supply * Exchange Rate = Foreign Net Reserves

Each individual unit of currency will equal $0.00086

Hi Darin,

Sorry if my first post sounds kind of dumb, but I'm not quite sure I follow what you've said above. If the CBI is 100% backing the currency, and the current exchange rate is 1170, and they have $58 bn in reserves........what would that put the actual total money supply at in terms of dinars? I guess this may be the figure that we really need to find.

Thanks to all you guys for the work and analysis you put into this.

[Moses]

There is little overall chance for the Dinar to become any type of Reserve Currency,...

There is a very real possibility that the GCC can become THE Reserve Currency.

If an honest assessment is given to all that has transpired since 2003, a case can be easily made for an orderly transition to the GCC dominance. The current strife in the Middle East is breaking down GCC and non GCC lines. Many other events that are playing out are indicative of a positioning to the Petro backed currency that was expected a few years back, but was delayed for yet unknown reasons.

To believe that this event is not political is to deny the existence of the flesh on your body. As such there is a War among Nations to position themselves for benefit. Hence the perception of chaos that we see globally.

Dominance and Supremacy for the next hundred years are at stake, yet for some of us,... bigger then trinkets and baubles,.... is the Global Minorities desire for rule of law and self governance vs those who would aspire to rule us.

The US Dollar WILL be replaced at the Worlds reserve currency!

The game at hand is for positioning in getting leverage and a large piece of the NEXT pie.

The players at present are the; Russia, China, Islamist Alliance (still forming), the GCC, the Soros backed South American alliance, the North American alliance and whatever the Europeans can salvage and piece together after loosing the recent battle against the Euro.

There is always a desire to end any conflict when advantage is gained, however an honest assessment of what is going on globally requires an acceptance that any increase in the value of the Dinar will only come once enough strength is gained by a powerful alliance.

Are we there yet?

Perhaps, perhaps not.

[zigmeister]

Never say never, Iraq is not in the position right now but them seem to have their eyes on it.

[Blu Collar Guru]

Iraq definitely has all of the necessary ingredients for the recipe of becoming a reserve based Country. (JMHO) Government Taxes and Imposed Bank Fees are exactly why the dinar will end up coming in at a high rate. It's a win/win scenario for ALL parties involved. A GLOBAL economy boost is in the works! We're all so lucky to be a part of such a once in a lifetime event. I truly BELIEVE we'll all be blessed.

~Dinar Days Are Near~

[tigerstripes]

Simple. It's 58 billion x 1170, or 67.9 trillion dinar. Which is pretty close to what the CBI says their money supple (M2) is, which last I checked was about 63 trillion.

Based on that, they could either increase the value of the dinar by 8%, or they could print 5 trillion more dinar. Lately, according to their financial statements, they've been going with the printing more dinar route.

Cool, thanks. But is the CBI actually liable, or do they have to 100% cover the M2, or are they just 100% covering the M1? Does fractional banking play a part in the M2 figure. I thought that some of the banks over there did employ fractional banking.

I also found it interesting in that article that Saleh said that banks do not accept deposits sometimes. It's difficult to work out if he meant they don't accept deposits on some occasions due to the large number of bills being deposited, or if they don't except deposits at all, and sometimes it's because of the large number of bills.

If banks don't accept deposits it's little wonder people have no faith in the banking system.

[keepmwlknfny]

Cool, thanks. But is the CBI actually liable, or do they have to 100% cover the M2, or are they just 100% covering the M1? Does fractional banking play a part in the M2 figure. I thought that some of the banks over there did employ fractional banking.

I also found it interesting in that article that Saleh said that banks do not accept deposits sometimes. It's difficult to work out if he meant they don't accept deposits on some occasions due to the large number of bills being deposited, or if they don't except deposits at all, and sometimes it's because of the large number of bills.

If banks don't accept deposits it's little wonder people have no faith in the banking system.

The CBI is liable for their total money supply M2.....backing it 100% due to the fact of the dinar being a pegged currency.....

Although the banks under the supervision of the CBI employ fractional banking AND islamic banking practices, the CBI does not employ fractional banking to back the value of the currency.....as a matter of fact, I dont know any central banks that back the value of their currency through fractional banking....its more of a tool for lending/financing/loans and such....

[tigerstripes]

The CBI is liable for their total money supply M2.....backing it 100% due to the fact of the dinar being a pegged currency.....

Although the banks under the supervision of the CBI employ fractional banking AND islamic banking practices, the CBI does not employ fractional banking to back the value of the currency.....as a matter of fact, I dont know any central banks that back the value of their currency through fractional banking....its more of a tool for lending/financing/loans and such....

So we should really be thinking of how they can convert 60 odd trillion dinar as opposed to 25 - 30 trillion? The recent articles coming out talk about converting 25 trillion, as that's the amount of currency.

Agree with you on the central banks not using fractional banking. They all use the Clapton pricnciple - Running On Faith. Maybe with the new deals showing up for power stations etc, the world is starting to show faith in Iraq.