Thread: Iraq/Dinar News. 09/05 to 01/14/07

Just To Pose A Question-- Would The Increase In Value Of The Dinar Be In Any Way Related To The Usd Falling Or Is It Only A Result Of Cbi Withdrawing Dinars From The Market?

The question was asked in a post by SGS, "Are we off of the program rate".

In an older article, the President of the CBI stated that they intended to allow the Dinar to trade in a narrow range plus/or/minus of one percent. If the base rate was 1475, it is easy to see that as of today they are below the "program rate" where they had been maintaining a narrow trading range. My past impression was that as long as they were willing to sell dinar at a rate of around 1475, and sell as much as anyone wanted, then real movement in price was never possible. However that seems to have changed. You might even consider this the begining of an RV, although not at the levels we eventually expect. When you combine this modest increase in the price of the dinar with the removal of dinar (a big bunch) from the economy, then these are the brightest days we have had in a very long time. Your comments are appreciated.

Originally Posted by Adster

The dinar is still under the guidance of the IAMB. This should change after the 12 December meeting where the CBI will have full control over the dinar again and can do as they choose.

Thoughts on this please:

Ok here it was in Aug. 10th 2006: "On the issue of transition, the IAMB was informed by the Iraqi representative that steps are being taken to establish an Iraqi oversight body to succeed the IAMB with a formal handover of responsibilities in December 2006.

"The next meeting of the IAMB is tentatively scheduled for October 30-31, 2006."

Ok on Nov. 6th: "The IAMB received useful briefings from the Representative of Iraq and the President of the Iraqi Board of Supreme Audit (BSA) on progress in implementing earlier IAMB recommendations. The IAMB welcomed the action the Government of Iraq is taking on the implementation of the IAMB recommendations, and continued to reiterate its concern that key actions, especially the installation of an oil metering system, needed to be comprehensive and were taking a long time to implement.

"The IAMB mandate expires on December 31, 2006 under United Nations Security Council Resolution 1637. The Representative of Iraq informed the IAMB that the Iraqi Council of Ministers at its meeting on October 19, 2006 approved the establishment of an Iraqi oversight body, hereinafter referred to as the Committee of Financial Experts, to be chaired by the President of the BSA. The IAMB welcomes the establishment of the Committee of Financial Experts to continue the work of the IAMB upon its dissolution and encourages the continuation of independent oversight. Transparency in the collection, recording, investing and spending of oil revenues is of paramount importance in providing assurance that Iraqi oil resources are properly managed and spent.

"The final meeting of the IAMB is tentatively scheduled for December 11-12."

so with the sentence: October 19, 2006 approved the establishment of an Iraqi oversight body, hereinafter referred to as the Committee of Financial Experts - followed by: The IAMB welcomes the establishment of the Committee of Financial Experts to continue the work of the IAMB upon its dissolution and encourages the continuation of independent oversight. SOUNDS to me that they handed things over but are watching every MOVE they make - or am I reading to much into this?

Plus - that meeting on Oct 19th sent an update that is dated Oct. 22: here is the link:

oversight_body link - first paragraph last sentence: ...meeting held on Oct. 19, 2006 has agreed the formation of the committee of financial Experts to take over the tasks previously performed by (IAMB) - NOW THAT to me seems to be saying: ok you run it for a bit and we will watch, if you do good we will give announce by the end of 2006. Once this was done, the ICI was signed on Oct 31 - CBI went into overdrive it seems. Thoughts?

now in that same link page 2 Cover letter: third paragraph last sentence: The Central Bank of Iraq had already voiced its support when the subject was raised by the International Monetary Fund. WOW the Cover Letter is dates 10-2-2006 before the Oct. 19th meeting.

All of this is on the IAMB website - Like your thoughts everybody.

Originally Posted by MrsCK

Thoughts on this please:

Ok here it was in Aug. 10th 2006: "On the issue of transition, the IAMB was informed by the Iraqi representative that steps are being taken to establish an Iraqi oversight body to succeed the IAMB with a formal handover of responsibilities in December 2006.

"The next meeting of the IAMB is tentatively scheduled for October 30-31, 2006."

Ok on Nov. 6th: "The IAMB received useful briefings from the Representative of Iraq and the President of the Iraqi Board of Supreme Audit (BSA) on progress in implementing earlier IAMB recommendations. The IAMB welcomed the action the Government of Iraq is taking on the implementation of the IAMB recommendations, and continued to reiterate its concern that key actions, especially the installation of an oil metering system, needed to be comprehensive and were taking a long time to implement.

"The IAMB mandate expires on December 31, 2006 under United Nations Security Council Resolution 1637. The Representative of Iraq informed the IAMB that the Iraqi Council of Ministers at its meeting on October 19, 2006 approved the establishment of an Iraqi oversight body, hereinafter referred to as the Committee of Financial Experts, to be chaired by the President of the BSA. The IAMB welcomes the establishment of the Committee of Financial Experts to continue the work of the IAMB upon its dissolution and encourages the continuation of independent oversight. Transparency in the collection, recording, investing and spending of oil revenues is of paramount importance in providing assurance that Iraqi oil resources are properly managed and spent.

"The final meeting of the IAMB is tentatively scheduled for December 11-12."

so with the sentence: October 19, 2006 approved the establishment of an Iraqi oversight body, hereinafter referred to as the Committee of Financial Experts - followed by: The IAMB welcomes the establishment of the Committee of Financial Experts to continue the work of the IAMB upon its dissolution and encourages the continuation of independent oversight. SOUNDS to me that they handed things over but are watching every MOVE they make - or am I reading to much into this?

Plus - that meeting on Oct 19th sent an update that is dated Oct. 22: here is the link:

oversight_body link - first paragraph last sentence: ...meeting held on Oct. 19, 2006 has agreed the formation of the committee of financial Experts to take over the tasks previously performed by (IAMB) - NOW THAT to me seems to be saying: ok you run it for a bit and we will watch, if you do good we will give announce by the end of 2006. Once this was done, the ICI was signed on Oct 31 - CBI went into overdrive it seems. Thoughts?

now in that same link page 2 Cover letter: third paragraph last sentence: The Central Bank of Iraq had already voiced its support when the subject was raised by the International Monetary Fund. WOW the Cover Letter is dates 10-2-2006 before the Oct. 19th meeting.

All of this is on the IAMB website - Like your thoughts everybody.

Based on the recent behavior (last two weeks) of the CBI, I would have to say that the game plan has changed in a dramatic fashion. So while they still may be maintaining a relationship,as they are with the IMF and World Bank, I feel they are now RUNNING THEIR OWN PROGRAM.

From Al Sabbah... sorry if it already got posted...

Economic :foreign direct investment principles of free trade and development Muhanad Hamid spring and Trade Ministry while thinking of the developing countries in how to secure its economic future,it will be useful to recall the words of former Executive Director of the Bank of Krupp "City" and Walter. Riston "fading of the sovereign author of the book (that capital goes to where it is needed and stabilize the place, which improves treatment).There was extensive discussion of the place that needs capital and the meaning of good treatment.A few years ago the American Chamber of Commerce survey identified a so-called "Recommendations of international investment", which has become a guide to be followed by government bodies in order to attract capital needed by the process of economic development,on the one hand,On the other hand, the guide is adopted by many global ratings agencies, "agency Moody" by which classified countries in terms of investment environment negotiable or not, according to this classification, either that the State station to the stability of capital or the outflow of it. These principles, in a nutshell, that the companies and international investors fallsWen to :- 1-a stable and predictable macroeconomic level :must be in the company of confidence in the economy, which invest the money to be administered in an efficient non fluctuates,any investor to be convinced that the law firm and not subject to change.Two-low political risk,so the investor able to rely on the coherence of the host government and its ability to maintain law and order,This is essential to any long-term investment.Three-large market capable of growth,since the size of the domestic market, and its potential for growth with a positive purchasing power to consumers in this market is a major incentive for investment,Companies do not want to invest in the market of low profitability.4-free access to markets :the important factor here the competition to the degree of government intervention (whether by the government or investor host government) in the freedom of entry to and exit from the market, State,The more free market whenever it more attractive to international investors.5-a minimum of government rules,so we must keep the cost of government intervention and government rules in the affairs of the profitability of the private sector to a minimum.6-rights and the protection of property :must protect private property,therefore it is necessary to avoid theft of property ownership companies whether tangible or intangible, such as patents, copyrights ... etc..7-a strong infrastructure,ie, the ability to complete transactions and the delivery of products and services to markets.These may include infrastructure for transport services, electricity, insurance and accounting services and financial system or any of the fundamental factors that can not invest yield financially without it.8-availability of high quality production elements :When it comes investor and the capital, technology and management,expected to add to the domestic market of skilled labor and raw materials in order to complete the system of success and profits.9-strong local currency :they must preserve the value of the local currency.If placed in an investment dollar and then devalue the local assets, "resident in the local currency," which has lost part Sometimes all Astthmark original dollar.10-free transfer of profits and interest income and equities,since the most important principle to the investor is to make a profit and get out.11-favorable tax environment :taxes must be encouraging for the expansion of business.In spite of the importance of tax incentives offered to attract new investments.However, the company's decision to invest or not usually built on how the tax system to normal operation after the establishment of the project.12-free operation of markets,so the company should be able to use the products they produce in a market to serve their production in other markets in order to maximize the overall efficiency and achieve better operation of production lines in the global markets,any sense of the integration of their production.The above is not easy or simple to implement,so, the expected results do not come quickly.and the governments are free to promote these features or principles.However, we should note is very important that the protection systems and other forms of economic isolation does not lead to independence as long as generate economic isolation in a global environment and head toward more openness and economic liberalism and thus economic integration,isolation does not serve the interests of economic development,could have previous experience had succeeded in achieving economic development independently,But this happened - as specialists-in a historic radically different from the conditions and realities of the current stage.on the one hand,On the other hand, these experiences have stopped at a certain failed with the continuation of the policy of isolation and obscurity had to face reality and return to integrate into the global economy.The road to success will not be easy or smooth, but we have to be road full of difficulties and obstacles in order to be prosperous and continuing success.So, it is necessary to deal on the basis of the policy of fait accompli and equal treatment with other economies that have become economic structures similar to a large extent not contain any substantive differences except for the differences imposed by the privacy enjoyed by each State or economic bloc itself,This similarity is one of the advantages of the current global economic system, which was designed to complete the process of integration and economic integration between the economies and the international transfer of the image of the global economy Standard

Mr. Knowles,
I know that the thought of a zero lop or reprint has been discussed at all lengths and it has been determined that these options are not in the best interest of Iraq's economy. In addition, there has been talk about a r/v that will only benefit the citizens of Iraq because the dinar is not being traded on the world market and those dinar holders outside of Iraq would not be allowed to "cash in" in other countries. I would be very interested in your thoughts regarding these topics.

Originally Posted by elgordo

Just To Pose A Question-- Would The Increase In Value Of The Dinar Be In Any Way Related To The Usd Falling Or Is It Only A Result Of Cbi Withdrawing Dinars From The Market?

IMO it is because of both the weakening of the USD along with the CBI taking Dinar out of circulation. Mostly because a lot of Dinar is out of circulation. This is not a RV... could be the beginning steps of a RV but more needs to be done... what do others think?

I was reading information on the U.S. Federal Reserve and found a great deal of similarities as to what is happening at the CBI right now. WM Knowles is right on the money... CBI practices mimick U.S. Federal Reserve practices. Hope some of this information helps.

Supervisor and Regulator

As part of its mandate to foster a sound banking system, the Federal Reserve supervises and regulates financial institutions.

Another way the Fed helps maintain a sound banking system is as the "lender of last resort." A financial institution experiencing an unexpected drain on its deposits, for example, can turn to its Reserve Bank if it is unable to borrow money elsewhere. This loan from the Fed would not only enable the institution to get through temporary difficulties, but most importantly, would prevent problems at one institution from spreading to others. The basic interest rate charged for these loans is called the discount rate.

The Fed's Structure The Federal Reserve System ·The nation's central bank · A regional structure with 12 districts · Subject to general Congressional authority and oversight · Operates on its own earnings

The most important of the Fed's responsibilities is formulating and carrying out monetary policy. In this role, the Fed acts as the nation's "money manager." It works to balance the volume of money and credit and their price--interest rates--with the needs of the economy. Simply stated, too much money in the economy can lead to inflation, while too little can stifle economic growth. As the nation's money manager, the Fed seeks to strike a balance between these two extremes.

To achieve this goal, the Fed works to control money at its source by affecting the ability of financial institutions to "create" checkbook money through loans or investments. The control lever that the Fed uses in this process is the "reserves" that banks and thrifts must hold.

In general, depository institutions are subject to rules requiring that a certain percentage of their deposits be set aside as reserves and not used for loans or investments. These reserve determine the amount of money an institution can create through lending and investing. Through reserves, then, the Fed indirectly affects the flow of money and credit through the economy by controlling the raw materials that institutions use to create money. The Fed's action triggers a chain of events that affects interest rates and the levels of prices, employment, and overall growth in the economy. The Fed has three tools for affecting reserves:

Reserve Requirements
Altering the percentage of deposits that institutions must set aside as reserves can have a powerful impact on the flow of money and credit. Lowering reserve requirements can lead to more money being injected into the economy by freeing up funds that were previously set aside. Raising the requirements freezes funds that financial institutions could otherwise pump into the economy. The Fed, however, seldom changes reserve requirements because such changes can have a dramatic effect on institutions and the economy.

Open Market Operations
The most flexible, and therefore most important, of the monetary policy tools is open market operations--the purchase and sale of government securities by the Fed. When the Fed wants to increase the flow of money and credit, it buys government securities; when it wants to restrict the flow of money and credit, it sells government securities.

As with the other tools, the Fed's open market operations affect the supply of money through the reserves of depository institutions. If, for example, the Federal Reserve wished to increase the supply of money and credit, it might purchase $1 billion in government securities from a securities dealer. The Federal Reserve would pay for the securities by adding $1 billion to the account that the security dealer's bank keeps at the Fed, and the bank would in turn credit the security dealer's account for that amount. While the dealer's bank must keep a certain percentage of these new funds in reserve, it can lend and invest the remainder. As these funds are spent and re-spent, the stock of money and credit will eventually increase by much more than the original $1 billion addition.

The procedure is reversed to decrease the money supply. If the Fed were to sell $1 billion in government securities to a dealer, that amount would be deducted from the reserve account of the dealer's bank. The bank, in turn, would deduct $1 billion from the account of the dealer. The end result--less money flowing through the economy.

It is a central bank, but it is decentralized with a system of regional Reserve Banks responsive to local needs. It is a public institution with a public purpose, but it has some private features--directors, "stockholders," and selling services. It is governmental, but it is independent within government. On the one hand, it was created by and reports to Congress; its highest officials, the members of the Board of Governors, are appointed by the President and confirmed by the Senate; and its earnings ultimately are returned to the U.S. Treasury. On the other hand, the Fed operates on its own earnings rather than Congressional appropriation; the Board of Governors terms are long and staggered, limiting the President's influence; and unlike some other nations central banks, it is separate from the Treasury.

With this complicated system of checks and balances, the Federal Reserve is the unmistakable offspring of the American political process. Congress created the System in 1913 in an effort to respond to the needs of a growing U.S. economy, and to avoid the cyclical pattern of booms and busts that had characterized much of the 1800s. By the early 1900s, there was general consensus that the country needed a central bank, but little agreement on how to structure it. As a result, the creation of the Federal Reserve turned into a legislative tug-of-war marked by frequent disagreement, occasional suspicion, but in the end, compromise. Eventually, the Fed--basically a creature borne of compromise--emerged with a structure designed to reconcile the needs, fears, and prejudices of many different interests.

This complicated structure, no doubt, can be confusing. But it ensures that the Fed's decisions are broadly based and properly insulated from narrow and partisan interests. In the end, this structure helps the Fed accomplish its overall mission: fostering a sound financial system and a healthy economy.

The Fed: Our Central Bank - Consumer Information, Federal Reserve Bank of Chicago

Originally Posted by AlwaysDreaming

Mr. Knowles,
I know that the thought of a zero lop or reprint has been discussed at all lengths and it has been determined that these options are not in the best interest of Iraq's economy. In addition, there has been talk about a r/v that will only benefit the citizens of Iraq because the dinar is not being traded on the world market and those dinar holders outside of Iraq would not be allowed to "cash in" in other countries. I would be very interested in your thoughts regarding these topics.

When the zero lopp issue came about, I always thought the MOF was talking about removing three zeros from the exchange rate and not the currency. Zero Lopp would mean a re-printing and complete re-issue of the iraqi currency. This is a very destabilizing move and would create an extreme lack of confidence in the iraqi economic system. My opinion has always been that this issue has been discussed too lightly without a full appreciation of the ramifications. And I have simply felt that it was not needed.

Concerning some kind of an internal reevaluation. If we believe the comments, articles and statements from the GOI, then their goal has always been a fully transparent system with a globally traded currency. With full participation in the global economic system. With the other evidence of international banks (Kuwait since the beginning) trading in dinar (before it is listed on the forex which is highly irregular) then a "closed" internal reeval is unlikely. Thank You.

Originally Posted by MrsCK

Thoughts on this please:

Ok here it was in Aug. 10th 2006: "On the issue of transition, the IAMB was informed by the Iraqi representative that steps are being taken to establish an Iraqi oversight body to succeed the IAMB with a formal handover of responsibilities in December 2006.

"The next meeting of the IAMB is tentatively scheduled for October 30-31, 2006."

Ok on Nov. 6th: "The IAMB received useful briefings from the Representative of Iraq and the President of the Iraqi Board of Supreme Audit (BSA) on progress in implementing earlier IAMB recommendations. The IAMB welcomed the action the Government of Iraq is taking on the implementation of the IAMB recommendations, and continued to reiterate its concern that key actions, especially the installation of an oil metering system, needed to be comprehensive and were taking a long time to implement.

"The IAMB mandate expires on December 31, 2006 under United Nations Security Council Resolution 1637. The Representative of Iraq informed the IAMB that the Iraqi Council of Ministers at its meeting on October 19, 2006 approved the establishment of an Iraqi oversight body, hereinafter referred to as the Committee of Financial Experts, to be chaired by the President of the BSA. The IAMB welcomes the establishment of the Committee of Financial Experts to continue the work of the IAMB upon its dissolution and encourages the continuation of independent oversight. Transparency in the collection, recording, investing and spending of oil revenues is of paramount importance in providing assurance that Iraqi oil resources are properly managed and spent.

"The final meeting of the IAMB is tentatively scheduled for December 11-12."

so with the sentence: October 19, 2006 approved the establishment of an Iraqi oversight body, hereinafter referred to as the Committee of Financial Experts - followed by: The IAMB welcomes the establishment of the Committee of Financial Experts to continue the work of the IAMB upon its dissolution and encourages the continuation of independent oversight. SOUNDS to me that they handed things over but are watching every MOVE they make - or am I reading to much into this?

Plus - that meeting on Oct 19th sent an update that is dated Oct. 22: here is the link:

oversight_body link - first paragraph last sentence: ...meeting held on Oct. 19, 2006 has agreed the formation of the committee of financial Experts to take over the tasks previously performed by (IAMB) - NOW THAT to me seems to be saying: ok you run it for a bit and we will watch, if you do good we will give announce by the end of 2006. Once this was done, the ICI was signed on Oct 31 - CBI went into overdrive it seems. Thoughts?

now in that same link page 2 Cover letter: third paragraph last sentence: The Central Bank of Iraq had already voiced its support when the subject was raised by the International Monetary Fund. WOW the Cover Letter is dates 10-2-2006 before the Oct. 19th meeting.

All of this is on the IAMB website - Like your thoughts everybody.

I think these are excellent observations. The IMB has/had oversight on the CBI and i think that's one reason for no RV in the past. I'm not sure if the "experts" took over already but they (the CBI) either has full control now or they will very soon. Granted the CBI will not do something out of the ordinary (ie. a huge RV) unless everyone else (IMF, World Bank, ICI members, etc.) has already agreed on this.