Iraqi Dinar Discussion Board

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The Central Back of Iraq stresses on zeros lopping
The Central Back of Iraq stresses on zeros lopping
Translated by IRAQdirectory.com - [9/29/2008]


The Central Bank of Iraq consultant, stressed last Wednesday, on the bank's determination to proceed with the project to delete the zeros of the Iraqi dinar to convert thousand dinars to one dinar, referring to the adoption of long-term plan for the project, which would be reluctant to the huge cash in Iraq.
Dr. Modhir Mohammad Saleh, added that "the bank will rely, in any case, on a long-term plan for the implementation of the project, in order to avoid any disruption reflected in the cash arena, which will move on based studies and slow and accurate resolution of all problems in the trading bloc committed a result of enormity of bulging cash in the Iraqi market. "
The factors of this action, which he described as very important by saying that "Iraq is one of the countries hit by hyper-inflation in more than two decades ago, reflected in monetary hyperinflation, for example, the monetary issuance increased of approximately 25 billion dinars in the early nineties, to be in 2003 Six thousand billion. "
He added, "If we add significant structural changes on the size of the budget that is the source of expansion in the monetary bloc, we can say that the country does not have the ability to stand such circulations in a large amount of cash currency units, a legacy of a hyper-inflation."
And that "many countries of the world suffered from this problem and turned their economies towards relative stability, it must find a solution to curb the enormous mass of cash to facilitate exchange of cash in Iraqi society, which mainly deal with cash money rather than the use of advanced banking payment."
He added, "This means we need urgently to the availability of substantial monetary of value and with small-scale to return to the easy system of payments and lead to facilitate transactions."
He cites the example of the saying that the category of 25 dinar in 1980 was equivalent to more than $ 75, the largest category of cash at the time, while in the highest category at present is the key category of 25 thousand dinars, and equals only $ 23. "
He added "to notice the difference .. that Iraq needs to have banknotes with high value and small size to facilitate the exchange and perform the functions of the various money."
Saleh continued of clarifying the problems impeding the performance of existing cash, saying: "One of the problems is " dollarisation "the Iraqi economy, the demand for one hundred dollars category to facilitate large transactions paid in cash, which represents about 120 thousand dinars, which means that the actual Iraqi economy needs to Category or categories of high value cash to facilitate the exchange especially in large deals. "
And about the contentment of the Bank's approach to the deletion of zeros, the central bank consultant said "the studies intend in this regard to circulate a new categories gradually and comfortably, and not limited to the replacement."
He noted that "this will give a lot of prosperity and stability in the availability of high and strong liquidity to facilitate transactions in line with the stage of growth and optimistic economic prosperity that Iraq will see in the months or years to come." He added, that "relatively long-term project would be included in the cash economy gradually that to add a lot of comfort and harmony in the economic situation."
The "trend is the deletion of three zeroes, instead of dealing with monetary issuance of $ 18 trillion dinars, our economy will deal with not more than 15 billion dinars, a mass of different categories to facilitate criticism, circulation and encourages banks to accept cash deposits."
"We know for example that one of the biggest problems at the present time the problem of counting and verification of counterfeit currency or the offense, and this burden to the banking system, and a burden on the citizen as well."
The central bank consultant concluded to say that "low cost counting and other leads to a decline in inflation by an estimated rate of 3%, resulting from the cost of cash transactions of large deals, as a citizen in Basra for example, wants to transfer funds cash to Baghdad through the category of dollar, he has to burden and costs of commissions coming from the conversion process. The cost added to the prices of transactions inevitably.