The second requirement
Central Bank of Iraq:
CBI, with headquarters in Baghdad, has four branches in Basra and Sulaymaniyah, Irbil and Mosul, and founded the bank independent Iraqi under the law of the Central Bank of Iraq issued on the sixth of March 2004, and is responsible for the maintenance of price stability and the implementation of monetary policy, including exchange rate policies and management foreign reserves and the issuance of currency management, as well as to regulate the banking sector.
I have used the central policies were effective, especially in controlling the exchange rate as an instrument of cash to curb the growth rates of inflation and therefore Amataatp to fuel expectations that lead to stagger trading and markets, to add the central achievement Ahlalia new, as it resolved a foster stability Bthalutha known (improved value of the dinar after stability - improved exchange rate After stability - curb growth rates in the general level of prices, I had the opportunity) would replace an incubator speculative inflationary and resolves automatically the real investment shop financial investment speculator. and so will be well-deserved change the management system of currency and payment system mechanism for quiet smooth objective wary speculators and fit any harmony with the trends of economic and even political The new Constitution approved by the requirements of market economy and the independence of the Central which was to be Tgierssayas not for a quirk of fate that happen was born a golden opportunity.
So the function of the bank's primary in this economic phase critical of the local currency and value, here focused on two axes in this regard, one relating to exchange-rate system is adopted, and the second is linked to the decision to raise zeros of the three to be done in the future. It is here and half the substantive to say, that the Central was able to to a large extent selection of the drainage system properly, through which he could maintain the stability of the value of local currency against the U.S. dollar, and through the use of daily currency auction, under which come down the Central Bank as a buyer of the dinar against the pumping dollars into the market, and improve the Iraqi dinar gradually and consistently, and guaranteed strength of the Iraqi dinar and the jettisoning him from the specter of oscillations, which were confronting the Iraqi dinar, which was reflected by the 2003 on the fluctuation of the economy as a whole, here are certain that the Central has succeeded in exchange rate policy that Throughout the years, and even the time of the global financial crisis and the resulting decline in oil prices, staple funded by dollars the central bank, it is through those dollars, the bank composition of its reserves of foreign amounting to more than $ 21 billion, and that worked very clear in the promotion and strengthening the position of the bank to maintain the value of the Iraqi currency, hence the central bank's task is not easy and that under a range of determinants such as management of an oil economy in a state that turned into a free market economy and emerging from the womb of the worst political crises and internal security.
So the proposal was made by the Ministry of Finance to the Central Bank to raise three zeroes from the Iraqi dinar, which has been approved by the Central Bank, where he spoke last for the long term strategy aimed at improving the situation of the Iraqi currency by deleting three zeros of them, and the strengthening of systems of payments Consistent with the economic development happening in the country.
As explained Advisor to the Governor of the Central Bank the appearance of Mohammed Saleh said that "zeros formed a cluster of up to four trillion paper money, the financial value of 27 trillion dinars, after that was 25 billion dinars in 1980."
In the meantime, wants the central bank through its policies in the daily currency auction stabilizing the exchange rate of the Iraqi dinar against other currencies as there were policies that the independence of central banks is one of the most important issues in the framework of research on the institutional framework which will help monetary policy to keep inflation rates at levels Almtdnipvi medium-and long-term means of independence here, freedom of the central bank in formulating and implementing monetary policy, without subjection to the considerations or political intervention does not mean independence by no means total separation between the central bank and the government and the private bank in determining the ultimate objectives of monetary policy where they can agree on these objectives between the Bank and the government Therefore, the bank looking for autonomy in determining the intermediate goals and in adopting the appropriate tools to achieve those goals with the need to maintain the greatest possible degree of harmony between monetary and fiscal policy ..
And actually enable the central bank in this way that preserves to a large extent to make the increase in the price growth to be normal until almost 5% here, we can say that the central bank Astmat to maintain the stock of currency Alajunbp has and everyone knows happened kind of pressure the government to finance some oil contracts and the central bank has rejected several other measures have helped to stabilize the exchange rate.
Indeed the monetary policy of central bank policy has been prudent over the past years, or after the change from 2003 to now, which is empowered veteran was able to fight inflation and this is the most important duties of central banks in the world and especially in Iraq and that inflation inherited from the previous regime where the Bank used policy tools Cash to curb inflation by raising interest rates, reaching this interest to 20% on time sucking up liquidity and worked at the same time banks to grant loans in the period the situation was serious and so does not help the business to borrow because of the deteriorating security situation, but now reflected policy to stabilize the security situation and the elimination of inflation, after the hard-line policy expansion has now cut interest rates to 4% for the central bank and this is one of the important factors which helped to stabilize the dinar in the Borders (1170) dinars to the dollar which is the point of convergence which draw or even the nominal exchange rate with the real exchange rate.
Accordingly, there is a relationship linking the value of the currency with the general level of prices, which is expressed in inflation, which addressed the core of the monetary policy of the Central Bank.
Third requirement
The central bank and monetary policy in the face of inflation:
Left the price trends experienced by the Iraqi economy since the beginning of the nineties of the last century and until 2006 the average annual inflation amounted to approximately 50% to reflect there is a structural problem has become inherent in the components of the entrances to the economy overall in Iraq, which has also continued to suffer from the phenomenon of imbalance between the sectors of commodity production ( with the exception of the oil sector now) and the distribution and service sectors that are still working for the service activities of marginal or low productivity.
Inflation and adverse effects on many aspects of economic and social development as it leads to lower standard of living for individuals especially those with limited income and to encourage speculative fixed assets and direct investments towards activities with high priorities and reduce the surplus or deficits in balance of payments. For the purpose of addressing these effects and develop appropriate solutions to be standing on the causes of this phenomenon. And diagnosis of the reasons is in itself and it was a way to cope with inflation, the current is achieved through one of the constants derived from maximizing the purchasing power of the Iraqi dinar through a basket of oil revenues instead of Tautness to the current economic situation. and achieve economic stability desired must be done via component and a single stable and equivalent to the value of the Iraqi dinar in the cemented and building the value of monetary unit of Iraq over the foreign currency. as experience has shown exercised by monetary policy in the past few years in the use of means to achieve the stability that came to its success through a number of forms of auctions held by the Central Bank of Iraq is the circulation of various financial assets to control the levels of liquidity and achieve stability and reduce inflation. However, the auction of foreign currency, which comes on top of that auction, it is alone, has the efficiency and ability to absorb the cash block exported at a rate of one and a half during one year without affecting the international reserves of Iraq, which means that there is a strong control on the growth of cash flows and ease inflationary pressures through the activities of the exchange market and the central role in inflation targeting.
- Inflation today arrived in less than 3% and this is a good sign for the Iraqi economy for the past when he was in previous years reached 34% and that Iraq today for the first time up to place the decimal one This is a success, where he and three decades after Iraq was living in a hyper-inflation and this, of course case lends stability to the internal value of the Iraqi dinar as the main objective of monetary policy is to maintain internal and external value of the Iraqi dinar
And dealing with inflation from the core goals by strengthening the Iraqi dinar exchange rate, after taking into account the fact that inflation and persistence in the long-term (regardless of its origins and causes in the short term, particularly vibrations sector supply source at the end of growth and expansion of the cluster of cash and low inflation are not taken only by adjusting monetary phenomenon and the stability of rates of monetary growth so as to achieve economic stability which is the responsibility of the monetary policy also says Mmeltn Friedman. not to mention that there are habits of savings and Aktnazip a variety of wealth comes in the forefront of the high level of hedging foreign currency, something which has reinforced the phenomenon of dollarization in various directions. Faced with this situation has to be the policies of transformation of nature unstable demand for money through the hedge of individuals in foreign currency, to trust in Iraqi currency, which is intended to be of high value by raising the value gradually, and delete the zeroes in the future. after the improvement of the level of the Iraqi economy and becomes at least provide part of the effective demand in the Iraqi market.
Eight inflation targeting by targeting the exchange rate, even when part of the program is announced for monetary policy means that the installed nominal currently approved within the monetary framework adopted by the Central Bank, which provided the variables or intermediate targets will change from one level to another level and will have an impact both ways: the first is that expectations rationality to the public will be affected immediately by the increasing degree of replacement of the dinar to the dollar, so as to avoid any potential loss of fatalism and the other, the exchange rate regime will be more flexible system than it is now and will work towards the gradual rise in the interest of the Iraqi dinar.
Thus, the monetary policy in Iraq at the crossroads strong influence on the levels of liquidity and this means adopted by the central bank is entering a seller of bonds in the money market within the financial sector in order to control those levels of liquid and Mnasebha in addressing the phenomenon of inflationary monetary
To the view that monetary policy makers in the country that "the Bank has succeeded in continuing its plans for the development of the Iraqi dinar with the value of foreign currency which was the top local and regional market." Stating that "the monetary value of the Iraqi dinar rose thanks to the plans and actions taken by the central bank continued to edit the Monetary Iraqi financial restrictions routine and administrative." expressing the hope that "the percentage of stability in the value of the Iraqi dinar to the descent the world as well as to neighboring countries that have survived in the stability of its currency national investments and to bring it
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