Deletion of zeros: the will of the state unit condition / Raed Fahmi
Published on Friday, July 19 / July 2013 14:13
Issued during the past week, conflicting claims of some deputies to the Central Bank on the implementation of the project to delete the zeros of the dinar. Some urged him to speed up the process due to the favorable conditions after the withdrawal of Iraq from Chapter VII.
While another said some need to be patient, noting that it would disrupt the state budget and embarrass the government, as well as the reality of the political situation with the approach of the House of Representatives election fever and the intensification of competition and conflict between the two blocs.
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It is known that the central bank had been submitted to the Cabinet late in 2011 to draft a professional integrated process of deletion of zeros from the dinar, and bearing in mind the economic and financial aspects, technical and security, social, psychological, and used the expertise of a global and reported from the experiences of other countries, including some of the neighboring countries and the region.
He expressed the bank at the time, his willingness to initiate the implementation of the process starting from December 2013.
But the bank issued a statement returned in May 2012 announced the postponement of the implementation of the project, even though it completed the bulk of the necessary procedures required by the process.
He attributed the reason for the delay to the need to secure the requirements of coordination and cooperation between the legislative and executive branches.
There was no reference in the discussions and debates that took place on this issue to Chapter VII the head, but the most important objections revolved around the inability to control and to control counterfeiting, money laundering and other areas of corruption, which can accompany the process of changing the currency.
But some went close to the center of the decision to say, it has launched the biggest corruption process, while accusing the central bank views as window hinder the process of monetary reform.
Thus, the debate focused mainly on the timing of the implementation process and the availability of its conditions, particularly the availability of the will of a united crucial part of the State in all its corners and powers to proceed with the implementation of this project, because it requires close cooperation between the various state agencies on the one hand and between the citizens and the media, organizations and institutions of civil society Ahli and on the other hand.
What we notice the absence of harmony and consensus within the parliamentary committees specialized, not to mention the parliamentary blocs different, and between the legislature as a whole, the government and the executive branch a whole, indicates clearly to the lack of requirement Qarase, which was based on him to postpone the implementation of the project in the past year.
The feasibility of the project and its importance Evoukan the potential negatives, a condition common will provide the state with all its powers. Without it difficult to accomplish loops and various aspects of the project satisfactory manner, able to surround the manipulation and corruption processes and control them, and with them the abusive exploitation of the withdrawal process and change the currency in circulation.
It is remarkable that the statements released through the media while the parliamentary committees not subject after discussing with the new administration of the central bank.
It is also essential that clarity is available in the content and significance of the scientific and economic exact currency exchange process. It is not the process would eliminate the inflation or growth fire, or a material change in the value of the currency and exchange rate.
But that the deletion of zeros concrete and positive impacts directly on reducing the cost of trading the currency transactions, facilitate, and reduce the risk of error associated with dealing with large numbers.
It also reduces the amount of currency in circulation, and thus the burden and costs of management and issuance. In addition, the currency change psychological effects on the citizen and his behavior Economic and Alanfaqa, what requires to anticipate that the work of awareness, and gradually, in the implementation of the switching process. LINK
Kaperoni: Thanks Bob..i did some highlighting. I am sure some people wont understand this so I will try to explain the last part. As we have said for a long time. IMO, I feel the "delete 3 zero" or "lift 3 zero" is a two part event.
Before they can do this, they must raise the value first (otherwise it makes no sense). So we expect the float to occur (accept IMF Article VIII), then as this article says..Dec 2013 they can declare "officially" they have deleted the zeros and start Jan 1, 2014 by implimenting the "law of indebitness" and issue smaller bills, etc. when the rate reaches 1 to $1 or about.
Bglong: In addition, the currency change psychological effects on the citizen and his behavior Economic and Alanfaqa, what requires to anticipate that the work of awareness, and gradually, in the implementation of the switching process.
The switching process will be gradual. Both the old and new have to coexist for that , or am I reading too much into it?
KellySue: ....this does sound encouraging!! thank you for the post Bob, and kap for the explanation!! It is what you have been saying all the while!! :) Blessings to you everyday!!
Tomceejay: We have a defined time line.
Mike: Kap, does Parliament have to pass the law of indebtiness prior to the float or do they wait until after Iraq moves to Ch 8 of the IMF charter and the value reaches 1 to 1? Thanks in advance for your reply.
Kaperoni: Mike, I don't think so..but several other economic laws need to be passed first.
Mike: Kap, thanks for the quick reply. In your opinion, what are the economic laws that require passing and how do they effect the RV? Also, have the required economic laws been vetted by Parliament and have they had the first or second readings? My reason for asking is that it appears Parliament is not functioning all that well currently and my hopes are that ultimately Parliament does not hold up the progress to Ch 8 because of their.............ineffectiveness.
Dr. Nan: Mike, you can read about the laws that need to be passed by perusing in the tab named "Kaperoni Chats and Friends". Kap has written on this in detail and his postings in there are worth a read.
As to the Parliament's effectiveness, this is a substantial improvement of late over their usual M.O. of fist fights and not having enough MPs show up to even have a quorum to meet. Huge improvement.
They seem to be getting along, and I am not aware of any blocs that are continuing to boycott Parliament. We just have to keep abreast of their published agenda items and read the articles to see where they are in the process. Read the forums and the research library to be informed. Oh, and listen to the conference calls.
Boomer911: I don't know guys, I don't want to be Debbie Downer but in my opinion this is one of the clearest articles I've seen and to me this is undoubtedly an article describing a lop...please someone change my mind here...
Mike: Thanks Doc, you cracked me up with the comment about Parliamentarians not resorting to fist fights :). I will say that having 230 members out of the 325 members elected participate in their government is pretty poor.
I guess my point is that they haven't passed anything of real value lately, things like the laws of indebtiness, HCL, 140 etc. The SOL is still pushing hard for the de-Baathification law and as far as I know they are still boycotting Parliament until that law is placed on the table.
You're right about the research library as well, I've used this resource (and the cc's) considerably in the past to further understand the process we're going through. Can you narrow down my search a little for me? I've searched up to a year in the past and I couldn't find the economic laws that Kap speaks to; thank you in advance for your help as well.
Dr. Nan: Mike, it is probably dispersed through more than one post. Tlar, Steve, or Kap could probably help you out. I don't have time right now to do the search. My husband and I are going out celebrate the birth of our 6th grandchild!
BTW, 230 MPs out of 325 is a major improvement, and they seem to meeting more regularly, more than I can say for our own elected officials in DC.
Terry: Boomer911, That word "lop" has been disproved so many times here at D.A. that it is very rarely ever even mentioned. That words makes absolutely no sense when you gather the info put out by all sources as to what their goals are. You be wrong!
mexia74: The simplist way to disprove a lop is to understand that a lop is neutral. No effect positive or negative on the economy. All of the articles coming out speak of the positive effect on the economy of "deleting the zeros".
The above article speaks of the "gradual" implementation. A lop cannot be done gradually. That is one of the reasons, a free float is good for us. If the currency free floats from 1166, there is no way to have a lop.
Kaperoni: We have 100 articles from the CBI, Finance committee, etc from people who know. And they describe the plan for the dinar. Now one article comes out that is confusing by someone I never seen or heard of before and the sky is falling...lol I say, when in doubt, go back and read some of the articles...start with Turki last week.
DarbSalad: Did Dr. Shabibi plan to initiate a float on the currency without passage of those economic laws? I am not sure what Turki spoke to Nujaifi about on Wednesday. It is pretty self-evident that Nujaifi is not motivated to hold parliamentarian sessions and pass the necessary laws.
Boomer911: mexia74, I respect your opinion and all others on here as well. You're right that a LOP is neutral, if that's all they do. However, the value of the new currency, of which we all agree is coming, would definitely be changed and that would have a positive effect on the economy.
If they are replacing and demonitizing the entire 80+ trillion..in current dinar......then putting out a seperate currency at approximately 80+ billion, once they are done and reach the end of the specified timeframe, about two years, 80 trillion is retired and gone and only the new currency bloc of 80 billion exists.
The "gradual implementation could be the two years they exist simultaneously while they are pulling in the old ones that have been LOP.
I'm in this like all of you til the end and I as much as anyone can't wait for it to start floating as I agree with the sentiments expressed here at DA. I'm just throwing it out there that the wording in this suggests LOP...whether that's accurate or not. ***I will not use capital letters in my posts.
U mad bro?: Boomer911 - Am I understanding you right, do you believe their is 80 trillion plus in paper currency? If so, where on earth are you getting this number from? My estitimate is more like 5 trillion.. 6 at most
Kaperoni: Boomer, first off you need to read the article. Nowhere in that article does it refer to any neutral event. In fact, that only portion in the article that it refers to what you suggest is prefixed by this statement...
"It is also essential that clarity is available in the content and significance of the scientific and economic exact currency exchange process."
In other words, he has no idea what the process is and wants clarity before they do anything.
Secondly, Shabibi tried twice to raise the value of the dinar. We know that and if his intentions was anything other than that, then the CoM actions (stopping Shabibi) makes no sense.
I suggest you research this investment a bit more and put all the information in the correct context before you spout off on one article.
Timsters: hi kap you say there are laws that need to be passed before they can rv/ff so how did shabbs try to rv/ff with out those laws in place ? just asking how it was possible to as you said (Secondly, Shabibi tried twice to raise the value of the dinar. We know that ) with out these laws in place ?
Bigbadassdog: timsters, finally someone asked the right question......how could he have possibly done it back then when none of these laws were in place. So you have to come to the answer that they weren't needed.
Tripphood: I think HCL is, the (capital letters) law. I feel it will be done at the same time. HCL, rv or float. TaDa.
Tobyboy: The CBI has been saying everything is done. I believe the only thing holding Turki up is getting the strength of dinar up against the dollar and then he will start the RV/FF. EVerything else will fall in place as such, laws that are needed will be passsed after starting of the RV or FF. I believe that Shabibi was going to do the same knowing they would have to get the laws done when they saw the wealth staring them in their face. IMO
Punisher: bigbadassdog, I asked those same questions a while back and nobody answered it....
Geezer: Timsters, I have been meaning to ask this very question on a conference call but have not been able to participate at the time of the call....
Shaund2073: Tobyboy, exactly he was going to make them move there lazy zubers and pass the laws once they seen the investors wanting to come in and the people demanding... but maliki didnt want that until chapter 7 was gone or whatever else just my opinion
--the fiat currency will fall as asset back currency will take its place
Kaperoni: Punisher, Geezer, this is pretty simple. Shabibi was only concerned about his monetary policy and what was best for the banking sector (he was adamant that the CBI was independent) and wanted to do what he wanted to do on his timeframe.
The bottom line is the CBI has authority under the CBI law to change the value of the dinar anytime, even now. And Shabibi raised the value several times over 10 years. When it came to this event, the prepared and were ready to execute it twice - once in June 2011, and again early April 2012.
That does not mean it was the right time or what was best for Iraq, it was what he wanted to do and I assume he felt was best for the banking system.
Clearly, there is much to be done to support the free market economy in Iraq. Laws, banking reforms (some just completed), investment contracts, political stability, less violence, etc.
And IMO, Maliki wants these things done before he is willing to let the dinar rise in value. Again, that does not mean it cannot happen, just that it appears that Maliki wants everything place first to support it.
DarbSalad: That might be an insurmountable hurdle with Nujaifi in control of parliament. You are luck if they meet twice during a week. Nujaifi is either incompetent or evil. Hopefully, Turki instructed him to get the remaining laws passed during their conversation on Wednesday.
Punisher: Kap, but even if Turki tomorrow tries to raise the value of the dinar I thought you said unless Maliki is on board it aint happening...he does have veto power right?
BlueyesinLevis: If by Veto Power you mean getting a Crooked Judge to swear out a bogus warrant against the Governor of the CBI to STOP them in their tracks...
They will NEVER be stable enough or have ALL the laws passed.. in advance of lifting the rate. It just wont happen. At some point.. the CBI is gonna pull the trigger... things will start moving.. and the Parliament will be playing catch -up.
The new rate will BRING STABILITY.. and progress and forward movement of infrastructure, banking and economic development.
At some point... they are just gonna have to do it.... and let the chips fall where they may.
Wgw242: Amen to that statement Blueyes. The GOI's MO has been nothing but catch up. The CBI is the key. They seem to be better educated, and guided by outside forces that know how and when to make this happed. Maliki has caused many set backs, but each time Iraq has become a stronger and better managed country. "let it come to us
BlowingRock: Boomer..be not dismayed. Kap and others are correct in that there ia a ton of excellent research here on this site, and some very intelligent members. Unfortunately sometimes they (we) get a little impatient, especially with questions on the "L word." Your question indicates an inquiring mind.
You should enjoy this site, the resarch, and the often-time (but not always) polite and learned responses to questions and following discussions.
Punisher: Blueyesinlevis, I 100% agree with this. Many things in Iraq are like a broken record...Parliament meeting and doing the same thing over and over, Maliki saying yes to things or promising things yet doing the same thing over and over, the same articles coming out about the same thing yet nothing...
I think you are right about pulling the trigger and let the chips fall as they may....Parliament will have to act if the c.b.i. raises the value because I'm sure they want to see Iraq grow and not collapse. Seems it is still up to Turki at this point...
Bigjon: thelonger maliki can delay this thing...the more funds he can funnel to iran and his own accounts...thats jmo
Punisher: Bigjon, and the higher the value will have to be raised in my opinion. More reserves etc...is a good thing
Boomer911: Thank you Blowing for the kind response. I agree with you and Kap that there is a ton of excellent research on this site and I have been trying to absorb as much of it as I can along with other stuff that is out there.
I do have an inquiring mind and want to know all sides so I know what might be coming as far as this investment goes. With only one mindset, I would be surprised and absolutely heartbroken if what we all want to happen doesn't. At least this way, I'll know.
I most certainly didn't expect the reaction from certain people merely because I gave my opinion and likening it to "spouting off". The ironic thing is the day before, I posted a response to an article posted by AdBob where it was talking of "removing zeroes" and "removing the yellow from coins" in the same article.
I cited the two statements because it clearly showed the context of interpreting "remove zeroes" as opposed to "remove the yellow from the coins" in that we knew the article didn't mean removing the color yellow from the coins but removing them from circulation.
I even said "for all you doubters this should ease any worry of a LOP". But unfortunately the comment was deleted sometime yesterday morning.
I do enjoy the site and benefit greatly from the hard work of others more studied on the subject than I but confess that it gets harder to do so when I get hammered for simply giving my opinion.
--Proverbs 3:5-6 Trust in the Lord with all your heart; do not depend on your own understanding. Seek his will in all you do, and he will show you which path to take.
AdminBob: Boomer, you should never be "hammered" for expressing your view. I will talk to mods. Stay on topic of the article and you should not be deleted either.
Tobyboy: Punisher Turki has the power to raise the value and Maliki can not veto his RV/FF once it is done. He can make life hard for him as he did with Shabibi with a bogus arrest warrant, but he has been given the authority for RV. The CBI is still independent of the government.
DarbSalad: The Iraqi Government announced that Thursday was a public holiday due to high temperatures. The ISX was closed. Turki needs to get off the dime and start this process. Their electrical grid will not expand out of thin air. Pretty embarrassing for your stock exchange to close for trading due to high temperatures. That has to be a first.
Tobyboy: DardSalad No not a first If I remember last year same happened all government closed down due to extreme heat. But it is pretty embassassing with all the wealth they have and have currency not worth as much as toilet paper except to use as boarder in bathroom.
Punisher: Tobyboy, with that said I hope Turki has the balls and vision to start something soon...the Iraqi people need it more than we do!
Tobyboy: Punisher, Lets hope he has the balls to get this going with this Surprise he said was coming. Tomorrow the auctions price 1180 by the Banks Lets hope this bring the strength of dinar up against the dollar. I have said all he waiting on is strength of dinar against the dollar. Lets hope he can get it & hold within 2% then I think we see a nice Surprise
WEDREAM: not that i think im answering for Kap but...while shabibi most certainly did try, he was unable because of the lack of much needed laws. he originally said he would raise the value after the seating of government & much needed legislation.
IMO believing that parliament would want what was best for iraq ie: rv of the currency. he needed as does turki ,parliamentary cooperation.while CBI makes & implements monetary policy, CBI cannot implement laws needed to coincide with monetary policy, without the laws needed to make it work monetary policy would fail. i hope this helps your understanding
Punisher: Tobyboy, I have wondered what this surprise could be...could it be a raise in the value of the dinar right after Ramadan, could it be Oct 1st we get a surprise ...or could we have a happy new year and a surprise on Jan 1st
DarbSalad: WEDREAM,The Iraqi people are in serious trouble. Nujaifi will not bring these measures to a vote. They would appear to straightforward proposals that do not create dissention in parliament. What is hindering Nujaifi from quickly passing these laws. They have basically been on vacation for four months. Obviously, a few are profiting from this system.
Tlar: One thing that the CBI needs to do this is not new laws. Shabibi was ready to do it without new laws. The laws are necessary to promote investment and a free economy. Not even Chapter VII was a requirement. The truth is Shabibi wanted to do this last year without the laws and without Chapter VII being removed.
The currency is a whole other matter and can be RV'd/FF independent from everything except one thing.
The government needs to support this change because they are supposed to be the watch dogs protecting the process against the counterfeiters, and it is imparative for the CBI to see that they will assist this project, doing their job which is to minimize the risk.
Mostly the word mafia's has been associated with the dumping of bogus currency in Iraq. The government has gone after the obvious little counterfeiters where they find them.
They are independent and have no affiliations, but Maliki's government has shown reluctance to tackle state sponsored counterfeiting.
Through its non action, has actually looked like they actually support it . In all the years counterfeiting has been an issue, Iran's name has never been mentioned by the government nor has there been any arrests or investigations into this activity. When we hear a Maliki MP saying mafias are getting ready to rig the process, IMO they are referring to Iran and they are still trying to stop or postpone the process at the very least.
Iraq is already flooded with counterfeit currency as we know. Some vendors have voiced reluctance to deal in dinars because of the amount of bogus currency circulating in Iraq.
We know that certain banks have received counterfeit currency and even opened accounts with it as the CBI has attempted to get them to Identify these accounts, confiscate the currency and close them.
I think the bank is more than ready and has been for quite awhile. The banks needs the government to do their job which is to protect the process until it is done by seeing that "all counterfeiters" are the enemy.
Maliki's government has shown that his loyalties are in supporting Iran at the expense of his own country.
We know Maliki has favored Iran in trade and supported Iran in its venture to save the Assad regime. We know Maliki would not be PM if not for Iran getting Sadr to throw his support behind him.
The relationship between Maliki and Iran is deep so much so, that he has gone against UN sanctions imposed against Iran again and again, risking his own credibility with the international community.
This is the same guy and his government, that need to give assurances to the CBI that they will protect this process from being taken advantage of. He has shown the CBI time again that he cannot be counted on. He has shown the CBI that they will not side with the CBI over Iran's interests.
It may end up that the CBI has to wait until his regime is gone in order to get the guaranties it needs to feel comfortable in making this change. The below paragraph is very telling.
"But the bank issued a statement returned in May 2012 announced the postponement of the implementation of the project, even though it completed the bulk of the necessary procedures required by the process. He attributed the reason for the delay to the need to secure the requirements of coordination and cooperation between the legislative and executive branches.
There was no reference in the discussions and debates that took place on this issue to Chapter VII the head, but the most important objections revolved around the inability to control and to control counterfeiting, money laundering and other areas of corruption, which can accompany the process of changing the currency."
The bank has no police force in which to control counterfeiting. This is a government responsibility that has not been exercised against the problem.
The bank has called for the government on occasion in the past to stop the proliferation of counterfeiting but to date, those calls have gone unanswered. Just like laws that have been voted on by parliament that have not been enacted by this government because Maliki did not like the law, this just might be our delay.
DarbSalad: Great insite Tlar. One question is wait until this regime is gone? I have my doubts that Maliki will go quietly with a possible defeat in next years elections. Evidence has shown that no one will stand up to him.
Punisher: Tlar, if by wait you mean when Maliki is gone then we will all be here until next April...which is very possible.
Tlar: punisher, the elections are in December
Punisher: I know but Maliki is Maliki and he will make sure he squeezes out ever last ounce of his Prime MInistership until April I believe when he must be out.
KellySue: Tlar, elections for PM is this December? I thought they were not until April
Punisher: As far as I know, and I could be wrong, April is when we will have until to put up with Maliki. I really hope we don't have to wait that long for an rv/ff because January is when I expect real movement.
2COLLECTG: guy`s the central bank is learning to be devoid of politics and imho the world bankers are now in control this is bigger than maliki or shabibbi or any other iraqi politician the international monetary & banking community are now in charge! this is about money and a whole lot of it!
--i bought this stuff for a penny i just want to sell mine back for a dime!
Punisher: 2Collect you are 100% right...but Maliki still is Prime Minister. He cannot just be thrust aside like a toy soldier. I just hope Turki digs deep down and gets some guts to make some historic moves...scary to think alot of this is in a Turki's hands.
ZenMav: I hope Turki digs deeper and gets something else that rhymes with guts.
2COLLECTG: p prime minister is just a word! question does politics run money or does money run poltiics? --i bought this stuff for a penny i just want to sell mine back for a dime!