A Movement To List Government Bonds In The Markets, 29 FEB
Market Economy News – Baghdad On Monday, the Iraqi Securities Commission explained the importance of government bonds, stressing that they provide financial liquidity for investment projects, while indicating that there is a movement from the Central Bank to list government bonds in the markets.
The Chairman of the Authority, Faisal Al-Haims, said in a statement reported by the official news agency and seen by Al-Iqtisad News, that “three issues of government bonds were issued, as the first and second issues were launched, and now there is the third issue.” He pointed out,
"There are requests from the Central Bank of Iraq to list these bonds on the market," indicating that
"those bonds are debt securities owed by the Iraqi government, in exchange for interest given to the owner of this bond."
He stressed, "This measure will provide financial liquidity for the investment projects launched by the Prime Minister and his government," suggesting that they "will be crowned with goodness and success for the Iraqis."
Government bonds are a type of debt-based investment, where you lend money to the government in exchange for an agreed interest rate.
Governments use them to raise money that can be spent on infrastructure or new projects, and
investors can use them to obtain set returns that are paid at regular intervals.
How Countries Can Successfully Reinstate a Gold Standard
On February 27, 2024 By Awake-In-3D
In recent discussions around monetary policy and financial stability, the idea of returning to a Gold Standard has resurfaced as a topic of considerable interest.
Historically, various nations, including the United States, Britain, and Japan, have adopted and then moved away from the Gold Standard at different points in their economic histories.
The process, while not new, presents a range of methods and implications worth exploring in today’s economic context.
Here I would like to demystify the process and implications of reinstating a Gold Standard, breaking down the complex subject matter into understandable terms.
Discussing the deeper GCR mechanisms, such as global gold unit of value and purchasing power parity between currencies, is beyond the scope of this article.
Understanding the Gold Standard
Simply put, a Gold Standard is a monetary system where a country’s currency has a value directly linked to gold. Countries that adopt the Gold Standard agree to convert paper money into a fixed amount of gold upon request.
The benefit of such a system lies in its ability to provide a stable and reliable currency value, contrasting sharply with the fiat currencies most countries use today, which are not backed by physical commodities.
The Three Roads to a Gold Standard
Historically, there have been three primary methods to transition back to a Gold Standard, each with its own set of considerations.
Returning to a Prior Parity: This method involves reinstating a gold value that was used in the past. It’s feasible only when the currency hasn’t strayed too far from this historical value. A prime example is the United States in 1879, which reverted to its pre-Civil War gold parity after a period of devaluation. This approach offers a straightforward transition under specific conditions but is limited by the extent of currency devaluation that has occurred since the last parity was used.
Adopting a Figure Close to the Current Trading Value: When returning to a historical parity isn’t viable due to significant currency devaluation, a country might set a new gold value close to the market’s current trading rate. This approach was taken by France after World War I. It allows for a more practical transition but requires careful consideration of economic impacts, including potential inflation or deflation as the market adjusts to the new standard.
Introducing a New Currency: In cases where the existing currency is severely devalued or destabilized, a country might opt to introduce a completely new currency with a gold value chosen at will. This method effectively starts the monetary system from scratch, offering a clean slate after economic crises such as hyperinflation. While it signals a fresh beginning, it’s typically a measure of last resort, reflecting profound economic disruptions.
Economic Implications for Returning to a Gold Standard
The transition to a Gold Standard, regardless of the method chosen, is not without its economic challenges.
For instance, setting a gold value significantly higher than the current currency value could lead to prolonged periods of price adjustment and potential recession, as seen historically.
However, examples from France in 1926 and Russia in the early 2000s demonstrate that with strategic tax reforms, countries can mitigate recessionary impacts and even achieve economic booms.
Ultimately, the decision to return to a Gold Standard involves balancing historical precedents with current economic realities.
The principle of stable money and low taxes emerges as a guiding formula for success, suggesting that a strategically planned approach to reinstating a Gold Standard would lead to substantial economic benefits for all nations.
The major consideration today, given how global trade and financial networks are all interconnected, is how each country’s gold-backed currency would be relative to each other in the context of currency exchange rates.
This is important, because never in the history of world has the entire planet orchestrated an interconnected system of different gold-backed currencies.
It’s also why the GCR is very complex and requires a highly sophisticated system of processes and management.
Historical Examples of Nations Reinstating Gold Standards
United States (1879): Returned to pre-civil war parity at $20.67/oz after the Civil War devaluation, where the dollar’s value had dropped but was still relatively close to its original value.
France (1926): Adjusted to a new parity after the franc’s value decreased significantly, reflecting a pragmatic approach to severe currency devaluation. The franc was successfully repegged to gold at a rate that reflected a 5:1 devaluation but combined this with tax rate reductions and infrastructure development, leading to economic growth.
Russia (post-1998 devaluation): Stabilized the ruble against the dollar at the prevailing rate after introducing a flat tax in 2001, which led to a period of economic improvement.
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THE Reserve Bank of Zimbabwe’s (RBZ) latest tokenized gold sales have mopped up a whooping ZW$ 5, 24 billion.
Synonymously known as Zimbabwe Gold (ZiG) was launched in October 2023 following the successful issuance of physical gold-backed tokens in 2022. The digital tokens can be stored in either e-gold wallets or e-gold cards and are tradable for peer-to-peer and business transactions.
ZiG value is at par with the value of the physical Mosi-oa-Tunya gold coin and remains informed by the international gold price.
In a statement Tuesday, the RBZ revealed that a significant chunk of ZW$ was mopped up after the latest sales.
“The RBZ would like to notify the public of the results of the RBZ Gold Backed Digital tokens Issue No 22 /20/2024 held on Tuesday 27 February 2024. The bank received 12 applications valued at ZW$5,24 billion to purchase GBDT and the full amount was allotted,” the bank said.
Total Milligrams of gold purchased during the sales amounted to 4,86 kgs of gold and cumulatively a total of 736,5 kgs of equivalent gold has been purchased to date.
The southern African country now joins other African states like Nigeria, Ghana and South Africa that have introduced digital currencies, even as several others have plans in the works.
The ZiG introduction is part of a wider plan by the central bank to stabilise the country’s local unit, which has been faltering against the US dollar, by mopping up excess liquidity in the market.
🇺🇸💥❤️🇺🇸. Iraq has a rate! Great news! 💥💥💥. $3.22-3.55 and will float upwards! 💥💥💥. Our Event should occur when the rate stabilizes on the Forex! 🇺🇸💥🇺🇸👇👇👇