Formality crowned the efforts of fiscal and monetary policies must be to reduce inflation
Date: Monday, 26/04/2010 19:21
Bilal Overture / House of Wisdom
Project is to drop three zeroes from the Iraqi dinar projects strategically in line with the development which is expected to be witnessed by the Iraqi economy in the next stage.
This procedure is not new in the global economic experiments, there are a lot of experience was highlighted by the experience of Germany after World War II.
Terms of solving the mark and then replace Alrajksmarck solution Aldug Mark misplaced.
In 1924 Mark was Alrienten new equivalent trillion × 1210 of old brands.
In Hungary Forint replace Alpinko solution, and in Austria schilling solution replace the Crowne, and finally deleted Turkey in recent years, six zeros from the currency.
The process of deleting three zeros from Iraqi dinar final procedural process for the treatment of the phenomenon of inflation, which hit the Iraqi economy during the eighties and nineties of the last century, with accelerated rates of inflation increased at serious to become one of the most pressing economic problems.
Costs are high for the wars is one of the most powerful source of inflationary pressures.
Indeed, he has increased the index to consumer price three times in the eighties, and rose up to (300) during the time period (1991-2002 (, the government has exhausted the economy Bmjhodat additional spending by doubling the war.
.
In such an economy-heavy military spending, the additional government expenditures, also have a role in raising the output prices and, therefore, the continued increase in public expenditure led to a continuing tendency to increase prices and inflation.
As a result of structural imbalances and the depletion of foreign reserves reached the exchange rate in 1995 to more than (2800) dinars per dollar, and then improved slightly after the implementation of the Memorandum of Understanding with the United Nations in 1996, and in 2003 reached approximately (1896) dinars per dollar.
It should be emphasized that the treatment of the phenomenon of inflation should be preceded by the process of removing zeros and concerted efforts of the monetary and fiscal policy to achieve this goal, the pressures of inflationary might arise from a number of reasons for working at the same time even though they differ in kind and degree from one country to another in the same country From time to time.
The entrance Cash believes that the authorities responsible for the money supply should adopt targets for the increase in the money supply so as to be consistent with the rate of increase in gross national product and then trying to make reductions to the expansion of cash consistent with the target level.
Given the fact that the inflation number of reasons should be aware that treatment of each type of these species varies somewhat depending on the different type, if the cause of inflation is excessive government spending, funded through the budget deficit and the consequent increases successively in the money supply and increases in wages and salaries , the treatment not be successful if you think the government to reduce expenditure only, or the money supply as recommended by the entrance of cash.
Monetary and fiscal policies are restrictive processor module when the cause is excess demand, but this type of policy can not be used freely when the cause of inflation cost.
After the enjoyment of the Iraqi Central Bank independence true under the new law gave the goal of price stability and reducing inflation rates weight the largest in the strategy of monetary policy, is the auction of foreign-exchange tool provided in the current circumstances to control monetary expansion, and the auction is to cover the costs of imports, as well as contributing to reduce the money supply.
It should be noted the need for effective coordination between fiscal and monetary policies must be to get rid of excess money supply.
The objective of monetary stability must be consistent with the goal of the level of foreign reserves in order to avoid impeding trade and account for external shocks and therefore, the use of a tool auction must be consistent with the minimum target for the reserves of foreign countries.
This policy has achieved, in addition to the effective operation of the open market a remarkable success in controlling monetary growth and improve the purchasing power of the Iraqi dinar.
After the dollar was equivalent to 1896 in 2003 became the equivalent of 1177 dinars by the end of September 2008, as estimated by the CBI that the core inflation rate was 12% (excluding fuel prices and transportation) in August 2008, and whether the calculated inflation rates by the Bank Central or the Ministry of Planning does not appear that there is a tendency for price rises continued to evolve into runaway inflation.
Has shown the past six years of confusion in the relationship between fiscal and monetary policies must be The picture was clear to the extent that reveals limits of the relationship in addressing the economic problems faced by the Iraqi economy.
The people of some economists and there is nothing contradictory in the treatment, especially the phenomenon of inflation stasis ..
Authority of Finance to give priority to tackling unemployment, and thus trying to follow an expansionist policy is the carry high rates of inflation compared to decline in the future after supply to expand commodity resulting from the increased production, while the view of monetary policy the opposite and trying to deal with inflation first and believes that the financial environment, monetary stable is a condition head of production, as well as the fact that the Iraqi economy is not flexible for several reasons, and therefore, this expansion is not appropriate now and will inevitably lead to inflation.
Faced with that, the incompatibility of two policies mean altitude possible in the rates of inflation as a result of the expansionist policy of financial power, so you should take several actions, the process of deleting zeros other rings; it must adopt a plan to stimulate the recycling process, productivity and overall economic, in various agricultural and industrial sectors and service and deliberative, banking and investment, thereby promoting each episode the other in ushering in each reservoir, capacity and channels, actors, and a strategy for economic and human development to allow effective use of financial resources derived from a crude oil and to achieve capital accumulation, which sings the national wealth, should also improve economic performance through the establishment of a comprehensive renaissance in the sectors of Iraq's national income to develop a positive performance in the real value of income and no monetary value.
It should also adopt long-term plan for the implementation of the project, to avoid any free commuting reflected in the monetary arena, because of the large mass of cash in the Iraqi market, which tend to marginally exchange dealing, rather than the use of advanced banking payment.
Finally, it should be noted that of the most important problems that can accompany the process of deleting the zeroes are the accounting problems of the many that have accompanied it, and of re-assessment of debt and financial obligations between individuals and institutions. If a financial institution has granted a loan of ten million dinars When deleting zeros will recovered ten thousand dinars, which means the language of accounting loss for the lending institution the amount of nine hundred and ninety-nine thousand dinars.
This may be remedied this problem by providing a new currency, according to a special project to re-pay existing contracts of old currency.
In this context, some countries (eg Argentina in 1985 and Brazil in 1986) designed a kind of monetary reform is more complicated for the return of long-term loans to pay the new currency, but the interest rate is adapted to a new format.
In general, the countries which tried hyperinflation was suffering from a level too low international reserves making it in the position of defending a weak exchange rate and stable prices, which paid for the use of technical and financial assistance from international and regional organizations has enabled it to balance of payments support.
Date: Monday, 26/04/2010 19:21
Bilal Overture / House of Wisdom
Project is to drop three zeroes from the Iraqi dinar projects strategically in line with the development which is expected to be witnessed by the Iraqi economy in the next stage.
This procedure is not new in the global economic experiments, there are a lot of experience was highlighted by the experience of Germany after World War II.
Terms of solving the mark and then replace Alrajksmarck solution Aldug Mark misplaced.
In 1924 Mark was Alrienten new equivalent trillion × 1210 of old brands.
In Hungary Forint replace Alpinko solution, and in Austria schilling solution replace the Crowne, and finally deleted Turkey in recent years, six zeros from the currency.
The process of deleting three zeros from Iraqi dinar final procedural process for the treatment of the phenomenon of inflation, which hit the Iraqi economy during the eighties and nineties of the last century, with accelerated rates of inflation increased at serious to become one of the most pressing economic problems.
Costs are high for the wars is one of the most powerful source of inflationary pressures.
Indeed, he has increased the index to consumer price three times in the eighties, and rose up to (300) during the time period (1991-2002 (, the government has exhausted the economy Bmjhodat additional spending by doubling the war.
.
In such an economy-heavy military spending, the additional government expenditures, also have a role in raising the output prices and, therefore, the continued increase in public expenditure led to a continuing tendency to increase prices and inflation.
As a result of structural imbalances and the depletion of foreign reserves reached the exchange rate in 1995 to more than (2800) dinars per dollar, and then improved slightly after the implementation of the Memorandum of Understanding with the United Nations in 1996, and in 2003 reached approximately (1896) dinars per dollar.
It should be emphasized that the treatment of the phenomenon of inflation should be preceded by the process of removing zeros and concerted efforts of the monetary and fiscal policy to achieve this goal, the pressures of inflationary might arise from a number of reasons for working at the same time even though they differ in kind and degree from one country to another in the same country From time to time.
The entrance Cash believes that the authorities responsible for the money supply should adopt targets for the increase in the money supply so as to be consistent with the rate of increase in gross national product and then trying to make reductions to the expansion of cash consistent with the target level.
Given the fact that the inflation number of reasons should be aware that treatment of each type of these species varies somewhat depending on the different type, if the cause of inflation is excessive government spending, funded through the budget deficit and the consequent increases successively in the money supply and increases in wages and salaries , the treatment not be successful if you think the government to reduce expenditure only, or the money supply as recommended by the entrance of cash.
Monetary and fiscal policies are restrictive processor module when the cause is excess demand, but this type of policy can not be used freely when the cause of inflation cost.
After the enjoyment of the Iraqi Central Bank independence true under the new law gave the goal of price stability and reducing inflation rates weight the largest in the strategy of monetary policy, is the auction of foreign-exchange tool provided in the current circumstances to control monetary expansion, and the auction is to cover the costs of imports, as well as contributing to reduce the money supply.
It should be noted the need for effective coordination between fiscal and monetary policies must be to get rid of excess money supply.
The objective of monetary stability must be consistent with the goal of the level of foreign reserves in order to avoid impeding trade and account for external shocks and therefore, the use of a tool auction must be consistent with the minimum target for the reserves of foreign countries.
This policy has achieved, in addition to the effective operation of the open market a remarkable success in controlling monetary growth and improve the purchasing power of the Iraqi dinar.
After the dollar was equivalent to 1896 in 2003 became the equivalent of 1177 dinars by the end of September 2008, as estimated by the CBI that the core inflation rate was 12% (excluding fuel prices and transportation) in August 2008, and whether the calculated inflation rates by the Bank Central or the Ministry of Planning does not appear that there is a tendency for price rises continued to evolve into runaway inflation.
Has shown the past six years of confusion in the relationship between fiscal and monetary policies must be The picture was clear to the extent that reveals limits of the relationship in addressing the economic problems faced by the Iraqi economy.
The people of some economists and there is nothing contradictory in the treatment, especially the phenomenon of inflation stasis ..
Authority of Finance to give priority to tackling unemployment, and thus trying to follow an expansionist policy is the carry high rates of inflation compared to decline in the future after supply to expand commodity resulting from the increased production, while the view of monetary policy the opposite and trying to deal with inflation first and believes that the financial environment, monetary stable is a condition head of production, as well as the fact that the Iraqi economy is not flexible for several reasons, and therefore, this expansion is not appropriate now and will inevitably lead to inflation.
Faced with that, the incompatibility of two policies mean altitude possible in the rates of inflation as a result of the expansionist policy of financial power, so you should take several actions, the process of deleting zeros other rings; it must adopt a plan to stimulate the recycling process, productivity and overall economic, in various agricultural and industrial sectors and service and deliberative, banking and investment, thereby promoting each episode the other in ushering in each reservoir, capacity and channels, actors, and a strategy for economic and human development to allow effective use of financial resources derived from a crude oil and to achieve capital accumulation, which sings the national wealth, should also improve economic performance through the establishment of a comprehensive renaissance in the sectors of Iraq's national income to develop a positive performance in the real value of income and no monetary value.
It should also adopt long-term plan for the implementation of the project, to avoid any free commuting reflected in the monetary arena, because of the large mass of cash in the Iraqi market, which tend to marginally exchange dealing, rather than the use of advanced banking payment.
Finally, it should be noted that of the most important problems that can accompany the process of deleting the zeroes are the accounting problems of the many that have accompanied it, and of re-assessment of debt and financial obligations between individuals and institutions. If a financial institution has granted a loan of ten million dinars When deleting zeros will recovered ten thousand dinars, which means the language of accounting loss for the lending institution the amount of nine hundred and ninety-nine thousand dinars.
This may be remedied this problem by providing a new currency, according to a special project to re-pay existing contracts of old currency.
In this context, some countries (eg Argentina in 1985 and Brazil in 1986) designed a kind of monetary reform is more complicated for the return of long-term loans to pay the new currency, but the interest rate is adapted to a new format.
In general, the countries which tried hyperinflation was suffering from a level too low international reserves making it in the position of defending a weak exchange rate and stable prices, which paid for the use of technical and financial assistance from international and regional organizations has enabled it to balance of payments support.