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Monetary policies in Iraq and proposals for the next phase applications
Thursday, October 15 / October 2015 - 15:44
Samir Alnasiri
Iraqi Central Bank is responsible for monetary policy in Iraq and its applications and on the developmental role that must be played by Kmussh sovereign sober in the design and application of monetary policy during the period of 2004 the date of the law until the present time through all stages of completion and the failure experienced by who tried through what has been accomplished that creates the kind of economic stability in spite of the lack of security and political stability and the difficulties and the objective and subjective conditions that accompany his work where there was a tangle of plans and policies. But then it became a monetary policy features and trends, strategies and clear the basis of which a reduction of hyperinflation, which had a negative impact clear to all economic life milestones since the blockade imposed on Iraq in 1991 and as a result of what they suffered Iraq wars for many disorders has become inflation mounts high paces record until he reached the highest rates It deteriorated all the productive sectors and has become a very big gap between the wages and salaries and high prices in the light of the many changes experienced by the Iraqi economy post-2003, and the issuance of the Iraqi Central Bank Law No. 56 of 2004, under which the Board of the Central Bank of Iraq administration took issue regulations, instructions, and select the mechanisms and tools and applications monetary policy in Iraq in order to achieve the central objectives of basic ones hyperinflation lowering and raising the purchasing value of the Iraqi dinar and maintain a balanced rates compared with foreign currencies, particularly the US dollar in addition to the formation of reserves of foreign currency and management as the body responsible for issuing currency and protect its value at home and abroad. Add to that the Central Bank of Iraq aims and according to the Bakannouna to the pursuit of stability in the exchange rate of the Iraqi dinar and promote the preservation of a stable financial system competitive and based on the market and the promotion of economic stability and sustainable growth and prosperity in Iraq ... The functions of the Central Bank of Iraq in achieving above objectives are as follows:
1. the formulation and implementation of monetary policy, including exchange rate policy
2- to retain and manage all foreign reserves
3. Administration Government reserves of gold
4. issuing and management of the Iraqi currency
5. monitoring and enhancing the safety and efficiency of payment systems
6. issuing licenses Awalajazac banks and the regulation and control of banks as defined in the Banking Act No. 94 of 2004.
objectives of monetary policy
The objectives of monetary policy to achieve economic growth and stability and to reduce unemployment rates and the stability of goods and services prices and the stability of exchange rates and improve the balance of payments and to achieve these goals through a direct and indirect monetary policy instruments They can identify the most important of these goals FOLLOWS:
1. Reduce inflation that case rooted in inflationary phenomenon which Eshrha inflation mainly caused by aggregate demand pressures led inevitably to an imbalance exchange market in terms of the desire of the public to keep cash balances over the supply of those stocks reflecting an increase in the increase of money circulation in inflationary expectations speed at the same time as the last it has become the main source of continued inflationary phenomenon, so it was the goal of reducing hyperinflation of the primary purposes of monetary politicians
2. maintain a cash balance of the market that work to strengthen the Iraqi dinar exchange rate as well as the face of the phenomenon cash substitution and the requirements of the availability of a tight monetary policy of a two-way exchange rate and interest rate, which will affect the money market balance.
3. retention and management of foreign reserves (foreign exchange and gold) of the basic tasks of the Central Bank of Iraq is to build foreign cash reserves in order to promote and cover the Iraqi dinar exchange and create price stability valuable money market, one of the success of monetary policy applications of indicators.
4. currency reform management system that the currency management system to adopt any shift from a small amount of currency chasing a large amount of the price of services and reflects the stability, growth and prosperity stage and on this basis, the proposed project is to delete zeros from the Iraqi dinar fired from Hassan considerations monetary system administration and the shift of monetary mass flaccid to monetary bloc easy trading and creativity monetary policy tools is the monetary policy of the most prominent aimed at achieving economic stability and exchange-rate peg rates in excess of the national economy strength and effectiveness to meet the challenges of economic policies
Economic as the achievement of foreign exchange reserves currently stands at up to $ 61 billion and install the Iraqi dinar exchange rate against the dollar is considered necessary and appropriate and had Auctions foreign currency held by the Central Bank of Iraq a positive role in maintaining the appropriate level of the exchange rate and install a negative role in the lack of control on foreign currency, which led to the escape of a portion of what is sold in individuals currency abroad and formally and without control, hurting the Iraqi economy has been the Central Bank of Iraq has taken several steps to expand the list of tools available to monetary policy and to cover the required reserves to include government deposits and the granting of facilities on deposits that mature in a short period in order to allow banks to manage the development of liquidity way more effective and can identify the most important what has been achieved monetary policy tools in the past (2004 - 2015) as follows:
First: the relative stability of exchange rates the price that the structural current to the stability of the rates of exchange rate despite the ups and downs on the rates current several times during 2014 and 2015, has been granted an opportunity for the Iraqi economy to rebuild and relative growth despite the fact that prices have not stabilized completely and due in part to the lack of stability and the nature of the security conditions, politics and falling global oil prices and the weakness of economic planning through which Iraq was able policy adopted by the Iraqi Central Bank to maintain a balanced rate relatively Iraqi dinar that.
Second: tight monetary policy that the tight monetary policy adopted by the Central Bank of Iraq as part of a strategy to achieve the goal of stability has shown that Almdolr financial system taking tends to decline because of fire Freedom of foreign exchange in accordance with the Principles and guidelines have been modified several times, but no full Aalsatrh on the cash trading market because of speculation in the parallel market and the weakness of mechanisms and policies adopted and loss of coordination between episodes of economic and relevant organs in Iraq.
Third, the financial stability of the system has embarked on monetary policy to establish a framework effective action works towards strengthening confidence in the local currency to create a strong and deep conditions to the stability of the financial system of any transfer of the impact of operational objectives for monetary policy to achieve an immediate objective for the same policy
Fourth: the reduction of inflationary phenomenon reflects the gradual decline in inflationary phenomenon positive effects of the policy of the Central Bank of Iraq in strengthening exchange Iraqi tastiest dinar price peppered strong effects on the stability of commodity prices interchangeable and that Eshrha at the same time the annual inflation basis (expressed in index of consumer prices), where the Valley of the policy to reduce the annual inflation rate to 2.6% in August 2015 and requires the central bank Iraqi adoption of a policy aimed at reducing inflation and addressing the trends and causes and in a manner provides critical stability of the wider and order to expedite the economic growth rates and ensure perpetuating through two signals main points, namely strengthening the real interest rate and the price of the Iraqi dinar exchange in a precipitate of balance and stability of the financial market and macroeconomic stability in the country.
Fifth: control the levels of liquidity and management based on the economic stability of the rules of monetary policy works analyzing the money supply and narrow in its broadest sense and liquidity position and determine the money supply and its components in the broad sense (cash) but the reality of the application confirms that control the levels of liquidity has not been achieved fully and effectively and this had negative effects on the cash trading activity and therefore lack of control over liquidity in the border the lower and upper and within the standards set by the Central Bank of Iraq.
Sixth: stimulate the banks to move towards the market to implement monetary policy adopted to serve the expansion of the credit scale and achieve the objectives of economic development has used the bank this tool to take control liquidity through directed banks to move towards the market and contribute to the economic stability of the monetary credit granted to finance the economic sectors of agriculture, industry, services, trade and housing, but Iraq's economic, security and political conditions and not to give the key role of the private banking sector led to the weakness of the private sector-led market.
proposals applications
Monetary policy for the next phase, including the Central Bank of Iraq is currently preparing a plan for the coming years in the development of policies, programs and working mechanisms and in particular with regard to the applications of monetary policy and means of supervision and control of the Iraqi banking sector we see that are studied following observations and suggestions:
1. that the Central Bank of Iraq re future plans and policies of the cash until 2020 with confirmation of its main goal of dealing with inflation and achieve the planned growth in the contribution of the banking sector in the GDP and the central economic task as well as it is necessary to search for new policies to achieve this goal and allows the government and private banks to participate in the growth and investment in accordance with the mechanisms and policies that can be implemented without the imposition of strict policies and give sufficient elasticity.
2. Treatment apparent gap between the financial policies of the state and monetary policies adopted by the Central Bank of Iraq and the requirements of the fight against inflationary pressures and reduce the current expenditure and coordination of plans and programs to achieve the rescue of the Iraqi economy from financial collapse.
3. activate Iraqi Central Bank policies on control of monetary policy in the private banking system to support and reconsider the policies of lending and the mechanics of credit risk management in the granting of credit to small and medium investment and loans in production and investment sectors that check clear cash flow and revive the economic cycle, which would contribute to the economic development and diversification of financial resources for the budget General.
4. The Central Bank of Iraq to reconsider study the possibility of lowering the cap timeout law of the volume of deposits in banks and frozen with the Central Bank of Iraq without investment as these frozen funds can invest and benefit from the support of private banks and enable them to expand their investment activities and the search for banking products New also requires the establishment of mechanisms for lending to banks that the cash-strapped suffocating because of the general economic situation that Iraq is going through.
5. development and support and stimulate the Iraq Stock Exchange and to find the means and tools that push and effective market and companies index prices in line, assets and standard output and profits by at At least inevitably about the true value of stocks and prevent speculation that harm Iraq's asset-which does not fit the true and actual value.
6. The Central Bank of Iraq to reconsider the instructions for auction foreign currency and regulate the sale of dollar process and define the role of banks in the mediation between the customer and the central bank in addition to determine responsibility The Ministry of Commerce and Ministry of Finance and the Ministry of Planning in the irregularities committed by some customers and not to download only the responsibility of the banks.
7. Establish (fund) or (a private portfolio) to certificates of deposit issued by banks wishing to address the deterioration of stock prices in the Iraq Stock Exchange and the addition of new banking management of the current investment to stimulate the investment climate in the market as well as increasing the volume of bank deposits, which leads to increased investment activities in all sectors of the economy and thus achieve positive impact for investors.
8. do boards of directors in banks passage of strategic, operational risks and implementation of the executive management of the bank to ensure that determine the operational risks associated with all types of banking products. And provide a base of information flowing in the bank, which play an important and key role in establishing and maintaining effective framework for operational risk management and follow-up over the possession of the banks an effective system for identifying, measuring and monitoring operational risk as part of risk management. And the Central Bank is preparing a regular and independent assessment of the strategies, policies and procedures for bank-related operational risks and the adoption of this regulation as a basic criteria for assessing banks and classification
9. reconsider a provision for doubtful debts in accordance with the list of guidance and re-elasticities and extended extra time for banks to be able to liquidate these debts, most of which go back to earlier periods and most debtors have migrated outside their cities Iraq for security reasons outside their will and that these ratios lead to a cut in the profits realized actually the result of deducting these percentages of net profit and thus affect the new investment banking activities.
10. restructuring of the banking sector, especially the government banking sector and to study the privatization of some of its divisions, branches and work on activating the operating banks expand and diversify its services Banking especially increased credit and investment share in a balanced manner with revenues of college to become these banks an effective pillar of economic growth that the move away from the monopoly of some banking operations and the withholding of government activities and public institutions for private banks.
(*) researcher and economist Copyright network of Iraqi economists.
Permission to quote and re-deployment, provided reference to the source. 10/15/2015 The opinions expressed in all material published on the Web site do not reflect necessarily the opinion of the Editorial Board, but the opinion of the author, which bears the scientific and legal responsibility
[You must be registered and logged in to see this link.]
Thursday, October 15 / October 2015 - 15:44
Samir Alnasiri
Iraqi Central Bank is responsible for monetary policy in Iraq and its applications and on the developmental role that must be played by Kmussh sovereign sober in the design and application of monetary policy during the period of 2004 the date of the law until the present time through all stages of completion and the failure experienced by who tried through what has been accomplished that creates the kind of economic stability in spite of the lack of security and political stability and the difficulties and the objective and subjective conditions that accompany his work where there was a tangle of plans and policies. But then it became a monetary policy features and trends, strategies and clear the basis of which a reduction of hyperinflation, which had a negative impact clear to all economic life milestones since the blockade imposed on Iraq in 1991 and as a result of what they suffered Iraq wars for many disorders has become inflation mounts high paces record until he reached the highest rates It deteriorated all the productive sectors and has become a very big gap between the wages and salaries and high prices in the light of the many changes experienced by the Iraqi economy post-2003, and the issuance of the Iraqi Central Bank Law No. 56 of 2004, under which the Board of the Central Bank of Iraq administration took issue regulations, instructions, and select the mechanisms and tools and applications monetary policy in Iraq in order to achieve the central objectives of basic ones hyperinflation lowering and raising the purchasing value of the Iraqi dinar and maintain a balanced rates compared with foreign currencies, particularly the US dollar in addition to the formation of reserves of foreign currency and management as the body responsible for issuing currency and protect its value at home and abroad. Add to that the Central Bank of Iraq aims and according to the Bakannouna to the pursuit of stability in the exchange rate of the Iraqi dinar and promote the preservation of a stable financial system competitive and based on the market and the promotion of economic stability and sustainable growth and prosperity in Iraq ... The functions of the Central Bank of Iraq in achieving above objectives are as follows:
1. the formulation and implementation of monetary policy, including exchange rate policy
2- to retain and manage all foreign reserves
3. Administration Government reserves of gold
4. issuing and management of the Iraqi currency
5. monitoring and enhancing the safety and efficiency of payment systems
6. issuing licenses Awalajazac banks and the regulation and control of banks as defined in the Banking Act No. 94 of 2004.
objectives of monetary policy
The objectives of monetary policy to achieve economic growth and stability and to reduce unemployment rates and the stability of goods and services prices and the stability of exchange rates and improve the balance of payments and to achieve these goals through a direct and indirect monetary policy instruments They can identify the most important of these goals FOLLOWS:
1. Reduce inflation that case rooted in inflationary phenomenon which Eshrha inflation mainly caused by aggregate demand pressures led inevitably to an imbalance exchange market in terms of the desire of the public to keep cash balances over the supply of those stocks reflecting an increase in the increase of money circulation in inflationary expectations speed at the same time as the last it has become the main source of continued inflationary phenomenon, so it was the goal of reducing hyperinflation of the primary purposes of monetary politicians
2. maintain a cash balance of the market that work to strengthen the Iraqi dinar exchange rate as well as the face of the phenomenon cash substitution and the requirements of the availability of a tight monetary policy of a two-way exchange rate and interest rate, which will affect the money market balance.
3. retention and management of foreign reserves (foreign exchange and gold) of the basic tasks of the Central Bank of Iraq is to build foreign cash reserves in order to promote and cover the Iraqi dinar exchange and create price stability valuable money market, one of the success of monetary policy applications of indicators.
4. currency reform management system that the currency management system to adopt any shift from a small amount of currency chasing a large amount of the price of services and reflects the stability, growth and prosperity stage and on this basis, the proposed project is to delete zeros from the Iraqi dinar fired from Hassan considerations monetary system administration and the shift of monetary mass flaccid to monetary bloc easy trading and creativity monetary policy tools is the monetary policy of the most prominent aimed at achieving economic stability and exchange-rate peg rates in excess of the national economy strength and effectiveness to meet the challenges of economic policies
Economic as the achievement of foreign exchange reserves currently stands at up to $ 61 billion and install the Iraqi dinar exchange rate against the dollar is considered necessary and appropriate and had Auctions foreign currency held by the Central Bank of Iraq a positive role in maintaining the appropriate level of the exchange rate and install a negative role in the lack of control on foreign currency, which led to the escape of a portion of what is sold in individuals currency abroad and formally and without control, hurting the Iraqi economy has been the Central Bank of Iraq has taken several steps to expand the list of tools available to monetary policy and to cover the required reserves to include government deposits and the granting of facilities on deposits that mature in a short period in order to allow banks to manage the development of liquidity way more effective and can identify the most important what has been achieved monetary policy tools in the past (2004 - 2015) as follows:
First: the relative stability of exchange rates the price that the structural current to the stability of the rates of exchange rate despite the ups and downs on the rates current several times during 2014 and 2015, has been granted an opportunity for the Iraqi economy to rebuild and relative growth despite the fact that prices have not stabilized completely and due in part to the lack of stability and the nature of the security conditions, politics and falling global oil prices and the weakness of economic planning through which Iraq was able policy adopted by the Iraqi Central Bank to maintain a balanced rate relatively Iraqi dinar that.
Second: tight monetary policy that the tight monetary policy adopted by the Central Bank of Iraq as part of a strategy to achieve the goal of stability has shown that Almdolr financial system taking tends to decline because of fire Freedom of foreign exchange in accordance with the Principles and guidelines have been modified several times, but no full Aalsatrh on the cash trading market because of speculation in the parallel market and the weakness of mechanisms and policies adopted and loss of coordination between episodes of economic and relevant organs in Iraq.
Third, the financial stability of the system has embarked on monetary policy to establish a framework effective action works towards strengthening confidence in the local currency to create a strong and deep conditions to the stability of the financial system of any transfer of the impact of operational objectives for monetary policy to achieve an immediate objective for the same policy
Fourth: the reduction of inflationary phenomenon reflects the gradual decline in inflationary phenomenon positive effects of the policy of the Central Bank of Iraq in strengthening exchange Iraqi tastiest dinar price peppered strong effects on the stability of commodity prices interchangeable and that Eshrha at the same time the annual inflation basis (expressed in index of consumer prices), where the Valley of the policy to reduce the annual inflation rate to 2.6% in August 2015 and requires the central bank Iraqi adoption of a policy aimed at reducing inflation and addressing the trends and causes and in a manner provides critical stability of the wider and order to expedite the economic growth rates and ensure perpetuating through two signals main points, namely strengthening the real interest rate and the price of the Iraqi dinar exchange in a precipitate of balance and stability of the financial market and macroeconomic stability in the country.
Fifth: control the levels of liquidity and management based on the economic stability of the rules of monetary policy works analyzing the money supply and narrow in its broadest sense and liquidity position and determine the money supply and its components in the broad sense (cash) but the reality of the application confirms that control the levels of liquidity has not been achieved fully and effectively and this had negative effects on the cash trading activity and therefore lack of control over liquidity in the border the lower and upper and within the standards set by the Central Bank of Iraq.
Sixth: stimulate the banks to move towards the market to implement monetary policy adopted to serve the expansion of the credit scale and achieve the objectives of economic development has used the bank this tool to take control liquidity through directed banks to move towards the market and contribute to the economic stability of the monetary credit granted to finance the economic sectors of agriculture, industry, services, trade and housing, but Iraq's economic, security and political conditions and not to give the key role of the private banking sector led to the weakness of the private sector-led market.
proposals applications
Monetary policy for the next phase, including the Central Bank of Iraq is currently preparing a plan for the coming years in the development of policies, programs and working mechanisms and in particular with regard to the applications of monetary policy and means of supervision and control of the Iraqi banking sector we see that are studied following observations and suggestions:
1. that the Central Bank of Iraq re future plans and policies of the cash until 2020 with confirmation of its main goal of dealing with inflation and achieve the planned growth in the contribution of the banking sector in the GDP and the central economic task as well as it is necessary to search for new policies to achieve this goal and allows the government and private banks to participate in the growth and investment in accordance with the mechanisms and policies that can be implemented without the imposition of strict policies and give sufficient elasticity.
2. Treatment apparent gap between the financial policies of the state and monetary policies adopted by the Central Bank of Iraq and the requirements of the fight against inflationary pressures and reduce the current expenditure and coordination of plans and programs to achieve the rescue of the Iraqi economy from financial collapse.
3. activate Iraqi Central Bank policies on control of monetary policy in the private banking system to support and reconsider the policies of lending and the mechanics of credit risk management in the granting of credit to small and medium investment and loans in production and investment sectors that check clear cash flow and revive the economic cycle, which would contribute to the economic development and diversification of financial resources for the budget General.
4. The Central Bank of Iraq to reconsider study the possibility of lowering the cap timeout law of the volume of deposits in banks and frozen with the Central Bank of Iraq without investment as these frozen funds can invest and benefit from the support of private banks and enable them to expand their investment activities and the search for banking products New also requires the establishment of mechanisms for lending to banks that the cash-strapped suffocating because of the general economic situation that Iraq is going through.
5. development and support and stimulate the Iraq Stock Exchange and to find the means and tools that push and effective market and companies index prices in line, assets and standard output and profits by at At least inevitably about the true value of stocks and prevent speculation that harm Iraq's asset-which does not fit the true and actual value.
6. The Central Bank of Iraq to reconsider the instructions for auction foreign currency and regulate the sale of dollar process and define the role of banks in the mediation between the customer and the central bank in addition to determine responsibility The Ministry of Commerce and Ministry of Finance and the Ministry of Planning in the irregularities committed by some customers and not to download only the responsibility of the banks.
7. Establish (fund) or (a private portfolio) to certificates of deposit issued by banks wishing to address the deterioration of stock prices in the Iraq Stock Exchange and the addition of new banking management of the current investment to stimulate the investment climate in the market as well as increasing the volume of bank deposits, which leads to increased investment activities in all sectors of the economy and thus achieve positive impact for investors.
8. do boards of directors in banks passage of strategic, operational risks and implementation of the executive management of the bank to ensure that determine the operational risks associated with all types of banking products. And provide a base of information flowing in the bank, which play an important and key role in establishing and maintaining effective framework for operational risk management and follow-up over the possession of the banks an effective system for identifying, measuring and monitoring operational risk as part of risk management. And the Central Bank is preparing a regular and independent assessment of the strategies, policies and procedures for bank-related operational risks and the adoption of this regulation as a basic criteria for assessing banks and classification
9. reconsider a provision for doubtful debts in accordance with the list of guidance and re-elasticities and extended extra time for banks to be able to liquidate these debts, most of which go back to earlier periods and most debtors have migrated outside their cities Iraq for security reasons outside their will and that these ratios lead to a cut in the profits realized actually the result of deducting these percentages of net profit and thus affect the new investment banking activities.
10. restructuring of the banking sector, especially the government banking sector and to study the privatization of some of its divisions, branches and work on activating the operating banks expand and diversify its services Banking especially increased credit and investment share in a balanced manner with revenues of college to become these banks an effective pillar of economic growth that the move away from the monopoly of some banking operations and the withholding of government activities and public institutions for private banks.
(*) researcher and economist Copyright network of Iraqi economists.
Permission to quote and re-deployment, provided reference to the source. 10/15/2015 The opinions expressed in all material published on the Web site do not reflect necessarily the opinion of the Editorial Board, but the opinion of the author, which bears the scientific and legal responsibility
[You must be registered and logged in to see this link.]
