RECENT INTERVIEW ABOUT THE TOPIC OF THE PROJECT TO DELETE THE ZEROS FROM BAGHDAD BY THE ACADEMIC AND EXPERT ECONOMISTS
August 12, 2024
This interview backs up almost all of what I have been telling my readers for years on my blog. There is also many additional information that is provided that can enhance our study of the process Iraq is going through to get back value to their currency. We call this the RV.
Disclaimer: All information in this newsletter is not intended for investment decisions / purposes. Mnt Goat is not a financial analyst, planner, banker, attorney or associated in any role with giving out professional investment advice.
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Mnt Goat
Mnt Goat: In a very recent interview from Iraq about the topic of the Project to Delete the Zeros from Baghdad by the academic and expert Economist Dr. Safwan Qusay and Dr. Ahmed Hal, Professor of Economics, at Al-Mustansiriya University. “the issue of deleting zeros, is positively reflected in the issue of withdrawing liquidity from people and the market , and thus going to Iraqi banks (inclusion)”. – “so people today are forced to replace their old money with new money, and they are forced to go to the bank, thus replacing this money or depositing it, perhaps at this time, means the withdrawal process.
How will inclusion ever be successful without the Project? Two main issues discussed at length by both economists – 1. Inclusion 2. Re-pegging from the sole dollar peg. They talked about other pros and cons of the Project and short-term and long-term ways to control the dollar. This is a long read but a VERY good read and shows us that this subject is taking a new light and they are trying to find solutions to the control the dollar in order to move it ahead.
I tried to put my comments throughout the translated dialogue and to bring attention to the interviewer’s questions. Then I tried to isolate the answer given by the economist. I hope this makes it much easier to read and understand. Basically, if you want to know what is holding up the Project to Delete the Zeros, thus the following reinstatement you must read these notes and try to understand.
Here is the full video of the interview:
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English Transcript of the Video:
Welcome, dear viewers, to a new episode of the Economy in a Week program. Again about the project to remove zeros from the Iraqi dinar and also issue a new currency. This project is a procedure that several countries resorted to, including Turkey in 2005 and also Venezuela in 2021, but can this project be implemented, the project to remove zeros from the Iraqi currency.
Currently, countries usually resort to adding zeros to confront waves of inflation and rising prices during periods of wars and crises, which of course lead to the erosion of the value of the currency, so the deficit in government budgets is financed through the issuance of cash, but the defenders of this idea pointed out that the large number of zeros weakened the Iraqi dinar against other currencies.
As for economic experts They believe that deleting zeros requires restructuring the banking sector
First, improving the tax system, second, in addition to encouraging investments. The Finance Committee Parliamentary indicated that the project will cost the state budget huge sums, as the size of
The printed money supply in Iraq is over 992 trillion dinars, while the one in circulation is 45 trillion dinars. So, the topic of deleting zeros and issuing a new currency, we will discuss it with our guest, but
To talk to our viewers about this topic, we are joined from Baghdad by the academic and expert Economist Dr. Safwan Qusay Dr.
Welcome to the Economy in a Week program on Screen
Change Welcome Doctor.
If the project to delete zeros today from the uncle of our viewers
Dear ones, welcome Doctor.
The project to delete zeros from the Iraqi Umrah is it still existing, I mean every period we hear about this topic but we do not see anything on the ground.
The reality of course from the theoretical point of view the project is still existing. The truth is Iraq suffered after 1991 as a result of the economic blockade to weakness in the value of the Iraqi dinar and the previous governments resorting to the subject of printing money after 2003 This currency was changed to a new currency and the old currency was withdrawn and this currency in circulation was issued currently
The subject is linked to several circumstances for sure, meaning the process of replacing the currency and deleting the travels requires an environment to make such a decision by the Central Bank and the government currently.
It invests in attracting the monetary mass that you referred to, the 92 trillion or more, to within the banking system, meaning the process of tracking the value of the Iraqi dinar requires knowing who owns this Iraqi dinar, and therefore perhaps Dr. Talj today the Iraqi government will resort to the Central Bank’s path to automating transactions and moving towards Ronnie cards and so on.
That is yes, it is the subject of financial inclusion, one of the government’s tools in the subject of moving the monetary mass
towards the banking system so that we know where this printed Iraqi dinar is, who owns it.
This real dinar, interest rate policy and the possibility of moving interest rates, I noticed that the Central Bank raised interest rates to balances on fixed deposits, which contributed to withdrawing part of this monetary mass into the banking system, so when we want to implement this procedure, we need to cancel the money paper money and convert it into money within the banking system within credit cards, and then we can think about this subject, but in the current period, any reference to this subject.
It means that the Iraqis who own this free cash dinar are doing by replacing it with other assets, this issue leads to weakening confidence in the value of the dinar, which is traded on the boycott, meaning this issue, the issue of deleting zeros, is positively reflected in the issue of withdrawing liquidity from people and the market, and thus going to Iraqi banks, the Central Bank of Iraq specifically, until it is replaced, so people today are forced to replace their old money with new money, and they are forced to go to the bank, thus replacing this money or depositing it, perhaps at this time, means the withdrawal process and means getting rid of this printed money needs a system, meaning it does not resemble suspicion, suspicion of the mass of money in circulation, and tearing it up or destroying it and then replacing it with new currency requires that we be careful about where this money came from Iraqi section of those who hold the dinar.
The Iraqi is trying to launder money, meaning where did this Iraqi dinar come from, from this person. The problem is that there is a monetary mass outside the banking system, which may be drug trafficking, illegal trade. So when we say replacement at this time, it means allowing them to carry the dinar illegal to enter circulation through replacement, so we need to track the movement.
The Iraqi dinar also does not mean raising the prices of goods because whoever owns a free dinar is certainly with these events and with this news, he may resort to buying assets with this dinar, which leads to an increase in the value of assets, so I think that the timing is not appropriate. The appropriate thing is to plan to add value.
For this dinar, the dinar is well-printed, meaning it is not subject to
counterfeiting. The Central Bank is keen to replace damaged currency, but the tools of the Central Bank Banks Iraq needs to be developed so that we encourage the dinar holders to enter the banking system
and re-inject this money into income-generating projects.
Of course, we also need to spread the culture of point of sale and credit cards and expand the subject of cash transactions. Yes, track the movement of the dinar currently. The hard currency has been controlled, but the dinar cash that is in circulation. We do not know who is the owner of the final dinar. The serial number available to the Iraqi dinar when it enters the banking system, we know who is the person who withdrew this paper currency and where he spent it so that we do not have a market for money laundering. Does the Iraqi government have?
Today, Dr. Safwan, a specific and specific number for the monetary mass present in Iraq from the local currency or does it not have this information means the truth of the monetary mass. It rose from 45 trillion to 82 trillion. And you mentioned 92 or more, meaning in my estimation it is around 100 trillion, the level is supposed to
transparency at the Central Bank is to announce the printed currency, of course, if we assume that it is 100 Trillion, the 100 trillion needs a dollar cover of no less than 65 billion dollars, which is what the Central Bank has in addition to the gold reserve in addition to covering the debts
Internal and external debts, the cash issued by the bank was released.
The Central Bank, yes, it was issued, but its recapitalization from
during internal borrowing, it leads to an increase in the liabilities on the Iraqi dinar, meaning the bank.
The Central Bank does not only cover the value of the issuance, but it also covers the liabilities on the dinar. The current government is indebted to the banks Civil and also to pardon the government banks and internal debts of about 45 trillion as well as external debts.
So when we say that the Central Bank has reserves of 113 billion dollars, it is enough to cover the value of the issuances and internal and external debts, okay, great, so no problem today.
So if the government wanted to take such steps today, I mean from the beginning of our conversation, Doctor, on this topic, we are talking about the negative side, the negatives that this carries or carries the project, what about its positives with regard to the Iraqi economic situation if we want to delete today zeros, similar to many countries that faced economic crises, and there is a country that is not far from Iraq, which is Turkey, as you know, yes, the truth is the topic, meaning the positives:
1.Certainly, from the accounting point of view, currently the numbers are, I mean, S12 I mean records accounting is not enough for numbers, big numbers, in facilitating the task of numbers, big numbers, for sure.
2.It also needs to be narrowed down, the subject means the return of Iraqis to their memory in the seventies and the eighties when one dinar was equal to 3.3 dollars, as is the Kuwaiti dinar today, the riyal Saudi, this means restoring confidence in the prestige of the dinar, so the subject has a positive side.
3.But is the printed money mass issued by the Central Bank really inside Iraq Is it with people who have the legitimacy to obtain this dinar, so I think we have to think. Balley, who is the holder of this dinar? Financial inclusion achieves this subject.
The dinar printed within the banking system, we are assured that the holder of this dinar is legitimate because there are certainly those who bet even from neighboring countries on the Iraqi dinar, but outside the system.
The banker when we say, “Ah, Dr. Safwan” I mean, an Iraqi citizen who owns a local currency, an Iraqi dinar, how can he come or obtain this Iraqi dinar, if it is not included in the data of the Central Bank of Iraq and the serial number, as I mentioned, is it counterfeit? I mean, is it
printed outside the Iraqi government system?
No, the truth is, there are no fears of such a thing, despite the counterfeiters’ attempt to counterfeit. The value of the dinar or the printing of the dinar, but the Central Bank is keen to withdraw any counterfeit currency, but when we say, for example, that there are exports from sanctioned countries to Iraqi territory in exchange for a dinar Iraqi, is this dinar the Iraqi dinar that these countries have has been converted into foreign currencies or is hoarded by some merchants from these countries.
When we say replacement, it means that we have startedthe process of financing these countries with a new currency. We need to make sure that the printed monetary mass in the latest European printing presses is under control within the scope of the Iraqi. There are some Iraqis who are fronts for companies or countries that are sanctioned. The problem is not with the nationality of the holder of the dinar. The problem is where he got this dinar from. In order to be reassured that this dinar is legitimate, we have to establish the issue of financial inclusion so that we can move later to adding the value gradually and not directly. I mean, I tend not to delete the zero or two zeros or three zeros, but rather to gradually enhance the value of the Iraqi dinar, meaning that the central bank when it rises dollar reserves by purchasing the Iraqi dinar, of course, from the citizens.
During the increase in bank reserves or by replacing it with new financial instruments, thus reducing the money supply and gradually the Iraqi dinar can recover, meaning there was a plan promoted within the corridors of the Central Bank that the Ministry of Finance, if it could not fulfill its internal debts, which are around 45 trillion, by transferring real estate ownership to the Central Bank reserves or using the surplus of the Ministry of Finance to settle debts the Interior, to raise the value of the dinar so that 1 dollar is equal to 1000 dinars and gradually.
We can do this task without changing without changing the paper
currency in circulation, yes, and I mean, does that affect the value of the currency, Dr. Safwan or the amount originally existing when people delete a zero or two zeros or even three zeros, it means the 000 dinar note is replaced if we delete three zeros it is replaced with a Dinar note. Will the value of this amount be affected for people or not? The value of the value remains.
The purchasing power is the same. No, the truth is definitely the purchasing power for assets, it does not decrease by the same value as the dinar. That is, someone who owns, for example, a million dinars, it is replaced by 1000 dinars. The value of assets valued at a million will not
decrease by the same percentage. That is, for example, a property worth 500 million. A dinar is not sold. The owner of the property cannot sell the property for 500,000 dinars. So now, the decrease is sharp on the banknote and gradually on the rest of the goods until the subject.
Profit is the subject of the difference between the selling price The costs cannot be reduced by the seller, for example, from a million dinars or 500,000 dinars per day to 500 dinars, he cannot absorb this, so
usually does not decrease at the same rate as it decreases the value of the paper currency, yes, okay, if Iraq wanted, meaning one day it decided to delete zeros from the Iraqi currency, Doctor based on what is determined how many zeros should be deleted from the currency, meaning currently the Iraqi currency is linked to the US dollar, meaning the price the fixed 1320 dinars is equal to 1 dollar, so if a decision was not made to link the value of the Iraqi currency to the US dollar, meaning and bye-bye, there may be reserves to cover this decision by deleting the difference between the two prices and compensating for it, meaning, for example, the Kingdom Jordanian The Jordanian currency is now pegged to the pound. The sterling is currently pegged at a fixed price level of 1320, so we must determine whether we are doing an open market operation for the value of the dinar or a closed market and linking it in a unified manner with its currency
Specific Iraq does not have sources to support the value of the dinar so far other than oil revenues. We need economic diversification. We need to increase the transparency of the dinar holders in order so we can remove the zeros and determine the fair value of the Iraqi dinar if, for example, the dinar Iraqi is covered by oil, meaning one dinar, for example is equivalent to one barrel or half a barrel. It is possible to link the currency to something specific, so it is determined from during this thing with gold, with oil, of course, with revenues other than
oil, there will be a fair value for this dinar, and we can thus decide how much ratio.
.....TO BE CONTINUED
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