Zig’s Place Chatroom Tuesday AM 3-9-24

Zig’s Place Chatroom Tuesday AM 3-9-24

NORV   great article the other day..this is big news...

NORV   Advisor to the Association of Banks: The Central Bank is following a consistent approach to achieving banking reform

NORV   Economy News _ Baghdad

Advisor to the Association of Iraqi Private Banks, Samir Al-Nusairi, explained today, Wednesday, that the Central Bank is following a consistent approach to implementing its strategy for banking reform, with the cooperation and support of the Prime Minister and the government, as the management of the Central Bank of Iraq plans to gradually cancel the window for selling foreign currency during the year 2024, until it leaves it completely.

NORV   "the management of the Central Bank of Iraq plans to gradually cancel the window for selling foreign currency during the year 2024, until it leaves it completely."

NORV   this is huge news

 NORV   Iraq cannot end the auctions unless they have an alternative to the auctions. which means they plan to float the dinar by the end of the year.

NORV   The reason if two fold, the auctions provide the method the maintain stability with the dinar to the dollar.

NORV   the auctions provide a source of dollars to pay for imports

 NORV   with either of these, the dinar exchange rate could get out of control

NORV   and they would not be able to pay for goods outside Iraq.

NORV   That is why they will float the dinar. floating the dinar will give them a new mechanism to maintain the dinar, the CBI will buying and sell blocks of dinar like other central banks do to maintain their currency.

NORV   They will also have to use dinar to pay for goods and services which will make the dinar internationally traded

NORV   These are all steps that other central banks currently use. so the CBI is trying to become a big boy with the world.

NORV   Here is another quote...

NORV   "in an effort to enable Iraqi banks to establish and establish solid banking relationships with the global and regional banking sector in order to achieve the sobriety of the Iraqi banking sector and full compliance with international banking standards and their requirements."

NORV   Confirmation of what I just stated above that they want the banks and Iraq to establish relationships around the world with International standards and full compliance which means that means IMF Article XIV.

NORV   Another quote...

NORV   "He said that the strategy of the Central Bank of Iraq for this year is to gradually cancel the electronic platform in line with its procedures and negotiations with the US Federal Reserve and international banks to regulate foreign trade financing. "

NORV   "The advisor to the Iraqi Private Banks Association concluded his speech by saying that the regulatory and reform steps that he is working on this year are to control the exchange rate of the cash dollar in the parallel market and return it to the equilibrium price in the cash trading market.

And to open dealing in local currencies to countries with which Iraq has important trade exchange, such as China and Turkey.

The UAE and India in light of special agreements concluded with them and currently being implemented."

NORV   This seems pretty clear and excellent news. We very well see that Iraqi dinar float on the global market at the end of this year or early next year.

Again it all depends on Iraq to get their decks in order, get the spread of the dinar in line and hold it for 90 days or longer, Etc in order to make that transition but it sounds like they are announcing that that is the plan.

The plan to use the dinar to start paying for things globally which would end the auction and they would need an alternative which would be floating the currency allowing it to rise based on the success and growth of their own economic situation. I think it's very promising

NORV   https://economy-news.net/content.php?id=41434

NORV I don't think people understand the significance of those statements in that article. For them to want to end the auctions this year, how it ties in with monetary policy. I tried to explain it in my comments but I don't know if I emphasized it enough. But it definitely is very good news

Zig   So NORV are you saying that it's  :Awesome: news???.....lol

Zig   Should we be :Joyous:  woooowhoooo   ??

NORV   It's not very often that you get tidbits that have a significant impact on monetary policy. This is this was a very clear statement on what their plan is to do with the auctions over the next several months. And anyone who understands how the auctions work knows that what they intend to do can't happen without something to take his place. Therefore, yes, it is huge news.

NORV   :Floating:

NORV   And more importantly another step in the direction of what I've been saying would happen for years.   :Yes:

 Sah:   NORV I am excited as it means they need to go international to get rid of the auctions. Besides floating they will also be able to dock onto the basket of currency for a more stable environment for their currency while also being able to float their currency to raise the value.

NORV   Of course anything that would get buyers of dinar excited. Just because this article came out doesn't mean it's going to happen, it means that's a step in the plan.

NORV   People need to remember, just because they're making monetary policy changes doesn't mean the dinar is going to go up significantly. In fact just the opposite in my opinion until Iraq passes the laws to encourage investment the dinar will remain weak. So it could still be several years before it raises to a level that people are encouraged about.

NORV   An exchange rate is a reflection of the economy. Iraq's economy is still very very weak

Maybe more here later – stay tuned and check back to Recaps Blog ………

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