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The role of the Iraq Stock Exchange in supporting monetary policy in Iraq
July 23, 2024 Last updated: July 23, 2024
Lawyer and banking expert Saif Al-Halafi
The world is now moving with rapid steps, racing with the wind, in the role of stocks supporting monetary policies, especially since the old classical theories considered that stock markets were not among the tools of monetary policy.
This concept reflected a traditional understanding, where monetary policy was focused on tools such as interest rates, monetary facilities, and monetary reserves. For banks
The development of theories and the different models of economic studies vary with the development of research, studies, and the financial market from one country to another.
It is difficult to make a theory apply to all different countries and economies, from emerging economies to more complex economies, and because of this dialectic based on trying to understand and establish the nature of the relationship between financial markets and politics.
Cash is becoming more evident in many countries
Stock markets have become part of the general economic strategy of governments and central banks, especially after the introduction of the idea of cryptocurrencies and digital banks, as they directly affect consumption, investment, and economic confidence.
Iraqi market
In the case of the Iraqi model and the long years of economic stagnation in that it is a rentier economy that relies mainly on oil to finance its annual budgets and the case of price speculation on the stability of the dollar exchange rate in local markets or what is known as the parallel dollar situation, we can look at the Iraqi market Securities as a supportive tool for monetary policy and influential in the case of a rentier economy.
This is done through:
1- Encouraging local and foreign investment.
The stock market can be a quick and important means of bringing in local capital, especially cash in circulation, and trying to return it to banking incubators and putting it into short-term investments through price maneuvers on the shares of emerging companies listed on the Iraq Stock Exchange for securities or investments. Long-term by pumping these cash blocks into the shares of profit generating companies, which are companies that regularly achieve lucrative annual financial profits,
thus reinforcing the idea of withdrawing the hoarded liquidity and returning it to bank incubators in a way that reduces immediate and temporary speculation on the parallel dollar in the local market.
It also creates real opportunities for the entry of foreign capital that moves between emerging markets, which provides them with the opportunity for quick entry, profitable investment, and safe exit.
2- Diversification of the economy indicates severe over-reliance on oil.
The stock market can be used to encourage local and international investments in sectors that create greater economic diversification than usual and a state of rapid price sales and maneuvers for shares of promising companies in Iraq
3- Absorption of liquidity
The stock market can play an important role in absorbing excess liquidity in the economy, which helps in controlling inflation, and
this depends on the ability of the Iraqi market to be quick in price deliberations of buying and selling through the shares of companies listed in it and putting pressure on companies.
Mediation in applying and activating the latest smart systems and phone applications for the daily operations of sales and contracts executed therein, and also encouraging the publication of financial statements of Iraqi companies in international platforms that encourage understanding of the culture of shares of Iraqi companies.
One of the most important economic theories that supports that financial markets can be an effective tool in monetary policy is the Wealth Effec[t] theory, which is summarized and almost consistent...in understanding the dialectic of the Iraqi economy and the stock market economy, and is more consistent with the Iraqi model called the theory.
Wealth effect theory, written by Gregory Mankiw.
Its summary is that the rise in the value of individuals’ financial assets gives them an incentive to withdraw money and re-inject it into purchasing new assets and stocks in order to increase wealth and gives them a feeling of wealth, which prompts them to spend on consumption and develop the national economy.
The bottom line is that all of these theories and studies support the idea that financial markets can be an effective and successful tool in achieving economic stability and promoting growth, especially in emerging markets such as Iraq
If the Iraqi stock market is exploited in the correct way that brings local and international investments, it can help in diversifying The Iraqi economy and creating new opportunities driving economic integration in Iraq, which makes the Iraqi stock market a valuable tool for monetary policies
https://mustaqila.com/دور-سوق-العراق-لأوراق-المالية-في
July 23, 2024 Last updated: July 23, 2024
Lawyer and banking expert Saif Al-Halafi
The world is now moving with rapid steps, racing with the wind, in the role of stocks supporting monetary policies, especially since the old classical theories considered that stock markets were not among the tools of monetary policy.
This concept reflected a traditional understanding, where monetary policy was focused on tools such as interest rates, monetary facilities, and monetary reserves. For banks
The development of theories and the different models of economic studies vary with the development of research, studies, and the financial market from one country to another.
It is difficult to make a theory apply to all different countries and economies, from emerging economies to more complex economies, and because of this dialectic based on trying to understand and establish the nature of the relationship between financial markets and politics.
Cash is becoming more evident in many countries
Stock markets have become part of the general economic strategy of governments and central banks, especially after the introduction of the idea of cryptocurrencies and digital banks, as they directly affect consumption, investment, and economic confidence.
Iraqi market
In the case of the Iraqi model and the long years of economic stagnation in that it is a rentier economy that relies mainly on oil to finance its annual budgets and the case of price speculation on the stability of the dollar exchange rate in local markets or what is known as the parallel dollar situation, we can look at the Iraqi market Securities as a supportive tool for monetary policy and influential in the case of a rentier economy.
This is done through:
1- Encouraging local and foreign investment.
The stock market can be a quick and important means of bringing in local capital, especially cash in circulation, and trying to return it to banking incubators and putting it into short-term investments through price maneuvers on the shares of emerging companies listed on the Iraq Stock Exchange for securities or investments. Long-term by pumping these cash blocks into the shares of profit generating companies, which are companies that regularly achieve lucrative annual financial profits,
thus reinforcing the idea of withdrawing the hoarded liquidity and returning it to bank incubators in a way that reduces immediate and temporary speculation on the parallel dollar in the local market.
It also creates real opportunities for the entry of foreign capital that moves between emerging markets, which provides them with the opportunity for quick entry, profitable investment, and safe exit.
2- Diversification of the economy indicates severe over-reliance on oil.
The stock market can be used to encourage local and international investments in sectors that create greater economic diversification than usual and a state of rapid price sales and maneuvers for shares of promising companies in Iraq
3- Absorption of liquidity
The stock market can play an important role in absorbing excess liquidity in the economy, which helps in controlling inflation, and
this depends on the ability of the Iraqi market to be quick in price deliberations of buying and selling through the shares of companies listed in it and putting pressure on companies.
Mediation in applying and activating the latest smart systems and phone applications for the daily operations of sales and contracts executed therein, and also encouraging the publication of financial statements of Iraqi companies in international platforms that encourage understanding of the culture of shares of Iraqi companies.
One of the most important economic theories that supports that financial markets can be an effective tool in monetary policy is the Wealth Effec[t] theory, which is summarized and almost consistent...in understanding the dialectic of the Iraqi economy and the stock market economy, and is more consistent with the Iraqi model called the theory.
Wealth effect theory, written by Gregory Mankiw.
Its summary is that the rise in the value of individuals’ financial assets gives them an incentive to withdraw money and re-inject it into purchasing new assets and stocks in order to increase wealth and gives them a feeling of wealth, which prompts them to spend on consumption and develop the national economy.
The bottom line is that all of these theories and studies support the idea that financial markets can be an effective and successful tool in achieving economic stability and promoting growth, especially in emerging markets such as Iraq
If the Iraqi stock market is exploited in the correct way that brings local and international investments, it can help in diversifying The Iraqi economy and creating new opportunities driving economic integration in Iraq, which makes the Iraqi stock market a valuable tool for monetary policies
https://mustaqila.com/دور-سوق-العراق-لأوراق-المالية-في
