An Economic Expert Details The Cash Conversion Cycle Of The Iraqi Dinar
Time: 10/02/2023 Read: 533 times {Economic: Al-Furat News} The economist, Salah Nouri, detailed the monetary conversion cycle of the Iraqi dinar.
Nouri said {to Al-Furat News} that: “The monetary cycle {the Iraqi dinar} exists between the Central Bank as the monetary authority and the only authorized one to issue the national currency and the Ministry of Finance as the financial authority authorized to implement the federal budget in terms of spending and collection.”
He added, "The third party is the public, the financial institutions {governmental and private banks} and the trade, agriculture and industry sectors, meaning that the cash that is offered to the public when implementing the budget returns to the Central Bank and then to the Ministry of Finance."
Nouri explained, “What is happening is that the cash raised through the implementation of the budget will not return to the central bank at a high rate and therefore to the Ministry of Finance,” attributing the most prominent reasons for this to “the exclusion of private banks from the currency auction, which no longer deposit the Iraqi dinar with the central bank in exchange for the dollar.” “In addition to the tendency of the public and merchants towards hoarding and dealing in cash not through banks.”
He stated, "The exclusion of private banks from the auction is the main reason; but this does not mean that they have a positive role in the economy. Rather, they only practice speculation in dollars, and they are supposed to engage in economic activity by accepting deposits and lending to economic projects."
Nouri added, “Accepting deposits and keeping a percentage of them with the Central Bank also contributes a percentage to returning the dinar to the Central Bank. This is why the Central Bank’s decision was for banks that were punished by the US Federal Reserve from dealing in dollars to continue dealing in dinars in their economic activities that are not speculative in dollars.”
He stressed that "the Central Bank can provide liquidity to the Ministry of Finance by issuing a new monetary mass, despite its disadvantages."
Specialists in economic and financial affairs reported that despite the large size of the monetary supply, which amounts to (83) trillion dinars, there is a noticeable scarcity of cash liquidity from the Iraqi dinar in the commercial markets, explaining that this comes for several reasons, the first of which is mismanagement. The financial file in the country. From: Raghad Dahham LINK
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