Conscious / strategy of monetary policy in Iraq / studies / c / 2
المشـرف العام General Supervisor
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Conscious Center for Studies and Research

/ اعداد:د. / Prepared by: d. The appearance of Mohammed Saleh

Monetary policy in response to the phenomenon of dollarization

Is dollarization one of the most important challenges faced by makers of monetary policy in developing countries in general and Iraq in particular, which means the use of United States dollars or any foreign currency have the ability to replace the national currency in transactions and contracts the internal financial and promise a store of value at the same time.

Although the degree of financial dollarization, composed mostly of local loans granted in foreign currency over a long period, as the percentage of those loans in foreign currency in some countries of Latin America to about 70% of the total loans granted locally according to available data in 2005.

As much as it relates to Iraq, the Central Bank of Iraq, supports one of the concepts of international financial institutions, amended, to express the phenomenon of dollarization in Iraq. فالمفهوم السائــــد لــــدى صندوق النقد الدولي بخصوص الدولرة الجزئيــــة partial Dollarisation The prevailing conception of the IMF regarding the partial dollarization partial Dollarisation يعد الاكبر تعبيراً عن واقع ظاهرة الدولرة وسيادتها في الاقتصاد العراقي . Is the largest expression of the reality of the phenomenon of dollarization in the economy and sovereignty of Iraq. فاذا ما كانت الودائع المصرفية الى عرض النقد بالمفهوم الواسع تزيد على 30% فان البلاد تعيش ظاهرة دولرة جزئية . If the bank deposits to money supply in the broad sense of more than 30% of the country is living a partial dollarization phenomenon. Parallel Currency But if one takes into account the installation of the money supply, which is dominated by the nature of the currency in circulation and sometimes as high as 80% of the total money supply, we find that the United States dollar is still caught on to it a parallel currency in circulation outside the banking system, Parallel Currency. In the settlement of transactions and cash payments of the Interior, and the promise of a good store of value, it can be argued that the phenomenon of partial dollarization is still prevalent but not exceeding 30% in the settlement of the movement of cash transactions in the local economy.

Notwithstanding the foregoing, the tight monetary policy adopted by the Central Bank of Iraq in the framework of Strutijeth efforts to achieve the goal of stability, has shown that the financial system Almdolr taking a drive towards a gradual decrease and that the dollarization phenomenon of partial and roots are now less than before, because of the freeing of foreign exchange and the adoption of monetary policy is working to strengthen the external value of the Iraqi dinar, which has increased during the last five years to more than 40%.

That rational expectations of the audience, I took all serve to keep the Iraqi dinar because of the gradual improvement in the value of the Iraqi dinar and the high exchange rate against the U.S. dollar.

Has embarked on monetary policy, to establish an effective framework works towards strengthening confidence in Iraqi dinars. اذ تساعد الثقة بالعملة المحلية على خلق ظروف قوية وعميقة في استقرار النظام المالي . As confidence in the currency helps local communities to create the conditions for strong and deep in the stability of the financial system. وعليه فقد باتت اللادولرة de-dollarisation And it has become de-dollarisation Alladolrp واحدة من الاهداف الرئيسة للسياسة النقدية في كثير من البلدان التي تعاني من الدولرة الجزئية . One of the main objectives of monetary policy in many countries that suffer from partial dollarization. Are awarded to address the dollarization of the central banks greater ability to re-formulate its monetary policy and in accordance with specific targets to achieve stability in prices and building growth and advance the process of operating in the country, and strengthen at the same time the link between domestic interest rates and change the total expenditure or domestic demand, and supports the effectiveness of movements of exchange rates, for all in the improvement of mechanical moving cash, any transfer of the impact of operational objectives for monetary policy to achieve the immediate goals of the policy itself. Pointing in this regard, the power to address the dollarization, is a measure on the effectiveness of monetary policy in the provision of reference moving to make the Iraqi dinar more attractive, which usually reflected the stability of demand function for cash or low speed handling money and stability of any under the influence of my reference exchange and interest rate variables are positive actors in the stability of demand Cash and cash strengthen the mechanical transition at the same time. ولايفوتنا ، ان سياسة اللادولرة ، تعد واحدة من مصادر الايراد القوية المولدة لرسوم الاصدار النقدي Seignorage And Aevotna, that the policy Alladolrp, is one of the sources of revenue generating strong cash issuance fees Seignorage Resulting from the increased demand for local currency and which reflected positively on the income disclosed in the annual financial statements of central banks and strengthen the status of net wealth of the balance sheet in such banks or central banks.

Conclusion: Note that concerned the affairs of the monetary policy of the country that there is some ambiguity in understanding the signals the monetary policy of the Iraqi Central Bank which has continued to respond to cases of hyper-inflation and deterioration of the Iraqi dinar exchange rate and through the manifestations of economic and social conditions experienced by the country for more than three decades, it is still bearing some circles responsible for stalling the country’s investment programs and the ability to build development projects on the results of the successes of monetary policy, which has reached its goals in reducing inflation rates mainly from increased levels of 34% per annum three years ago today, falling to about 11.7% سنوياً . Annually.

Has enabled the monetary policy of the Iraqi Central Bank of the stability of the country’s monetary system and the face of a wave and inflation after the significant improvement in the Iraqi dinar exchange rate and a high percentage increased to 40% In value since 2004, as well as building a strong foreign currency reserves, all led to building strong foundations in maintaining the economic stability of the external and the establishment of a favorable climate for starting investment. An understanding of the positive role played by the reference interest rate to restore confidence in Iraqi dinars and promise to keep an attractive source Monetary wealth, has reached its goals in reducing the annual inflation rates as the basis mentioned above. Especially after the country plunged manifestations of dollarization and speculation, and the development of alternatives liquidity source physical assets, which led some of the functions of money being a store of value and a tool for cash flow from out of the money and the monetary system, which made this system when the weakest point in the history of the country’s economy.

At a time when the international reserves of the Central Bank of Iraq is based mainly in the construction and stability of the external value of the Iraqi dinar and defend the exchange rates, high stability, the tendency to act outside the scope of the goals and objectives of the cash balance, claiming that the financing of investment projects of various government, would have serious consequences on the balance external economic and lose the country’s defense force for the entire economic stability, as well as weaken the ability of monetary policy in the protection of the national currency and re-enter in the failings of inflation caused by the deterioration of exchange rates and carrying waves sudden high external imbalances, becomes difficult to face reserves is weak, because of the relevance of those reserves international financial market, a market very careful and quick compared to the market volatility of commodity.

The attractive force of the Iraqi dinar today, as the currency and a strong national now is the best tool in the evolution of saving money and financial intermediation, and the way the correct and appropriate to address the phenomenon of inflationary expectations, which became the assets of the substitutes for the dinar as the preferred means of wealth and the most co-existence of such inflationary expectations, which has become final as returns similar to the interest generated by the deviations of inflation down, to represent عوائد قوية غير ملموسة يفرزها التضخم Strong returns intangible secreted inflation ولكن تتفوق على الفائدة المصرفية الأسمية . But superior to the nominal interest rates. By so doing, the form of this inflationary trend speculative element in the economy away from real investment during the trading assets of financial or real promised assets highly liquid and profitable fast as interest implicit high embodied in inflation expectations, which is not interest, which makes the market is not indifferent to the productive activity real as long to achieve inflation returns on assets intended to be speculative and not for productive activity. وبهذا كانت اشارة الفائدة التي اعتمدتها السياسة النقدية هي الوسيلة المضادة And this was a sign of interest adopted by the monetary policy is the means by anti- Of inflation expectations and the resulting investment activity in order to regain its rightful role outside the real incubator inflationary speculative and not as perceived by those circles who ignore the work of monetary policy and the mechanics involved. ولاسيما جهلها وتجاهلها لمخاطر استمرار الضغوط التضخمية والتوقعات المرتبطة بها والموفرة Especially ignorance, ignorance of the risks of continued inflationary pressures and expectations associated with them and provided لبيئة سالبة غير مستقرة تعد طاردة للأستثمار الحقيقي وجاذبة To a negative environment is unstable for investment real repellent and attractive بقوة لتيارات المضاربة في السوق Strong currents of speculation in the market والابتعاد عن النشاط الانتاجي . And stay away from productive activity.

Of the above, reflecting the gradual decrease in the phenomenon of inflationary positive effects of the policy of the Iraqi Central Bank in promoting the Iraqi dinar exchange rate which gave its strong stability in commodity prices of tradable and Eshrha at the same time the annual inflation base (expressed as index of consumer prices with the exception of two paragraphs of fuel and lighting transport and communications), which showed the other is a significant decrease in growth rates as the annual inflation rate basis in the month of December 2008 approximately 11.7% after a record 33% in the month of December of 2006.

As the means and measures adopted by the current monetary policy to influence the inflationary phenomenon come to play an important role to rein in inflation caused by the factors of aggregate demand. And continue to Iraqi Central Bank adopted its current policy aimed at reducing inflation and to address the trends, causes, and so as to provide stability of cash wider and acceleration in the rate of economic growth and ensure perpetuating through signals two main adopted the current monetary policy, namely strengthening the real interest rate and exchange rate of the Iraqi dinar to accelerate the balance and market stability financial and macroeconomic stability in the country.
In the context of the international financial crisis and the hedge impact and implications of current and potential impact on the Iraqi economy, particularly after the recorded Indicators of international desire to free up the financial markets and the level of global financial integration, a low level, in the framework of the threat to the market system وآلياته في العالم من مواطن ضعف غير مرغوبة ، فضلا عن And mechanisms in the world of the weaknesses is desirable, as well as حالة التدهور الملحوظ في اداء الاقتصاد الدولي وتردي مساهمة القطاعات الحقيقية في العديد من بلدان العالم سواء الصناعي منه The case of marked deterioration in the performance of the international economy and the deterioration of the contribution of the real sectors in many countries of the world, whether from industrial Central Bank of Iraq stresses the importance of strengthening the means possible and needed to stimulate the banking credit activity supportive for the growth of real activity in Iraq through activating the role of the commercial banking system and the general financial sector to go to market and promote the desired levels of funding so as to ensure accelerated growth Economic and desirable requirements of the targeted gross domestic product, especially to achieve high rates of growth in all sectors, including real يساعد في الوقت نفسه على رفع كفاءة مستويات التشغيل والاستخدام لموارد البلاد At the same time help to raise the levels of operating efficiency and use of the resources of the country المادية و البشرية الممكنة والمتاحة ، ودون ما تعارض او اغفال لاستراتيجية السياسة النقدية ومتطلبات Material and human resources available and possible, without conflict or the omission of the strategy of monetary policy and the requirements of بناء الاستقرار والتوازن الاقتصادي الكلي ومكافحة التضخم . Building stability and macroeconomic balance and the fight against inflation.

The strong tendency of coordination between monetary and fiscal policy has taken a range of activating the unified framework of stability and economic growth as desired and will run to the helm of the country’s economic self-reliance and free of distortions occurring in the economic system and international finance. أخذين بالاعتبار الفرص والامكانات المتاحة في قطاع العرض الكلي واللازمة لتعجيل مساهمة Taking into account the opportunities and potential available in the aggregate supply and to accelerate the contribution of Economic sectors of goods and services In the gross domestic product, which will have a positive impact on real growth rates to maximize the desired. In the Iraqi economy.

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