Nwa Articles are a plenty that say 30-40 trillion dinars are in circulation. You don't need me to find them and prove anything because we all know anything over a trillion is ridiculous.
gerry48 Based on the article Preacher Man posted on page 2 of this thread, I believe 1 to 1 is easily accomplished.
I disagree however that electronic Dinar will be treated differently than paper Dinar. If the CBI/GOI were to Lop electronic accounts, the citizens, who mainly use cash, would NEVER trust any electronic money, smart cards for example, or banks in general. This would make it extremely difficult for Iraq to move to a "cashless" society, a stated goal of the CBI.
Any citizen would learn that holding cash was wise and profitable while using banks cost him a fortune.
Post RV I believe the debit side of loans will be lopped, thus avoiding turning borrowers into slaves, while lenders will receive the equivalent of what they lent pre-RV, a fairly reasonable solution. Neither party is injured, so there would be no negative consequences to discourage lending in the future.
gerry48 continues: I am also of the opinion that a Dinar is a Dinar is a Dinar. The Iraqi citizens will be made wealthy. A separate in-country rate would crash the local economy.
Why buy anything in country when Amazon or Alibaba will give considerably more value for your currency, even if you must pay enormous shipping charges and import duties?
Of course this is all just my opinion, I am hopeful we will soon see an extreme increase in our wealth. I wish good health to all.
Mike I'm inclined to agree with gerry48 on the digital lop, it would be counter-productive to growing Iraq's economy. Besides, there are numerous articles stating that roughly 80% of Iraqi's are ignoring the banks, they use them almost exclusively as exchange centers and don't deposit money into savings or checking accounts.
All of those holding physical currency would jump on their camels and head over to Turkey or Jordan and exchange their dinars and laugh at those who engaged the banking system.
If they were inclined to deposit some money into a bank, would anyone fault them for depositing it in Turkish or Jordanian banks?
All Iraq needs to offset the existing financial transactions is the Law of Indebtedness, where the debt would be lopped, not the currency itself.
A rising tide floats all boats, I just can't see them lopping digital dinar and leaving the physical dinar to maintain its value.
It would be a great solution to the currency currently in the banks as far as removing liability for the CBI, but it would create so much distrust in the system I don't think Iraq would ever recover from it.
Saddam raided these same accounts during the Iraq/Iran war and they still have a bitter taste in their mouth over that, it's the main reason they won't engage the banks today.
And now we know that Iraq has a rate, it's 1166-1. All the talk from the guru's about Iraq's inability to open the budget without a "real" rate is bogus.
All the talk about remittances through the banks without a rate is also bunk. Millionday, Backdoc, Myladies, Nova and all them are going to be super busy trying to explain this away.
The banks have begun the process of remittances and funds have been distributed from the budget. By now, everyone knows that they know less about what's going on in Iraq than the regular folks here at CC. I'll bet we're going to see some new guru's hit the airways in the near future, their credibility is justifiably shot. --" We are all born ignorant, but one must work hard to remain stupid " Benjamin Franklin
Tlar The physical currency will not be lopped. Anyone holding physical currency will get the advantage of a new exchange rate. in other words a dinar will always be a dinar.
My contention is that all digital accounts will be adjusted to reflect the new rate. 100,000 will become 100 be it a loan or an account. The whole of the banking system will be adjusted to reflect the new rate just as will everything else in Iraq.
Only the physical currency being in the hands of the people will see an increase in value, just as it will over here. Think of it this way, everything in Iraq will be adjusted without exception, to the new rate.
That's why the CBI has been pulling in the currency as fast as it could. The currency too will be adjusted but it's value will be enhanced because of whatever the new rate is.
A dinar will be whatever the exchange rate is up or down. A dinar is and will always be their currency. So if it comes out at one to one, a 10,000 dinar note will have a new equivalent value of 10,000 US dollars.
To many this is controversial and I understand that, but if you consider what they have to do based on M-2, M-3 numbers, they have to do it this way to make this work.
We know this is exactly what they intend to do with the stock market. In 2010 we saw articles from the ISX voicing concerns because the whole market will be adjusted to the new rate meaning an Iraqi with 50,000 shares the day before will have 50 shares the day after.
This is at the crux of why this has not been an easy thing to do and why it has taken so long even if it still has a ways to go.
We can assume if this was to be a lop or float that they would have already done it, but because this is complicated and there will be Iraqi's who will not understand, there will be bitching and moaning for a period as everyone adjusts to the change.
Nobody will lose any value but there will be no winners except those holding physical dinars. It is my belief that there will be no sacred cows because there can't be.
This is a complete change of the system and they can't pick and choose. Logically for this to work, as the currency goes up in value, everything else must go down in value, digital accounts included.
I have no dinars in any account so this to me is an exercise in mechanics and procedures.
So think through it and if you still think they won't do it this way that's ok with me. It is something just to think about but it does answer some questions as to the how can they do this with X number of dinars. This is not a new idea. I have been saying this for years. As I said, it is controversial but just an exercise in thinking. tlar
Mike Respectfully, you said it the best, Tlar. It is my belief that there will be no sacred cows because there can't be. This is a complete change of the system and they can't pick and choose.
I don't believe Iraq can afford to treat digital currency different than physical currency, as you stated, they can't pick and choose. I also believe as well as alienating Iraqi's themselves, you would radically effect how investors look at Iraq, both now and in the future.
Imagine, you're an investor in Iraq and all of a sudden your accounts have the zero's lopped off. You haven't lost any value, today, but what about the future.
Lopping in the past has always been attributed to high inflation but now you've added another layer for businesses to be concerned about.
God forbid if Iraq started to suffer from inflation anytime in the future, business owners might become skittish (based on previous CBI actions) and close up shop and move their money out of Iraqi banks, if they lopped once during prosperity, they'll lop again when under duress.
If Iraq has to change the system completely, then either all the currency would be lopped or all of the currency would appreciate in value, you're right, there can be no sacred (physical dinar) cows.
Also, would this digital lop effect those who have dinar in banks outside of Iraq?
I wouldn't think it would, so would anyone want to put their money into an Iraqi bank after Iraq has lopped their digital currency?
Iraq's banks are in their infancy, depositors would scream bloody murder if they were unable to enjoy the windfall that those who ignored the banks would enjoy, at least I would.
I know many folks who are invested in the ISX and have money in an account with Warka, and all of them would be livid if they were penalized for engaging the system before the rate was changed.
I guess it's all academic at this point, we'll just have to wait and see what happens when the dinar appreciates, lopping the currency digitally just doesn't make good business sense to me. IMO.
Tlar Well said and well thought out Mike. I still hold to my belief this is the way it will go but you present very valid points.
I'm sure that when they were designing this program that these same kinds of points were argued and to me it will be interesting to see what they actually decided to do.
It is the very heart of the problem and IMO is what it will take to make this work. These are the kinds of decisions they had to make early on. Thanks for thinking about this with me.
To answer your question about a lop of digital accounts in other countries, I don't think it is that important of a question in the sense that there are very few accounts if any of dinars in individual bank accounts other than Iraq.
The dinar is not acceptable as a valid currency anywhere, but Syria, Iran and Iraq and now India. Mostly in countries outside of Iraq that accept the dinar, their banks convert the dinar into the local currency and any deposits are made in the local currency.
What makes the dinar convertible in these countries is that their governments have accepted the dinar in trade and their Central Banks will buy it from their local banks as citizens come in to deposit or convert.
The dinar does not circulate in these countries but is accumulated by these same governments to be used in trade with Iraq. So IMO there is very few if any accounts in these other countries in dinar that belong to citizens of these countries. I don't know if this answers your question or not.
I do agree with you though on this point, if I am right, there will be many livid people in this country that were sold a bill of goods by gurus early on telling them to open accounts in Warka. tlar
Mike Good stuff, Tlar, thank you for your comments and thoughts, in the end no one really knows what will happen.
I do enjoy the journey and plan on using these discussions in the future when I have more money to invest. It's good to see all sides of the question and try to figure out the other guys next move.
In the end, we're all getting a first class education when in comes to geo-politics and how it effects monetary policy in a foreign country.
Earlier Discussion on Dinar/Dollar 1to1: