Bank Indonesia Highlights Three Major Benefits of Digital Rupiah – News Tempo
TEMPO.CO, Jakarta – Bank Indonesia (BI) Governor Perry Warjiyo believed the Central Bank Digital Currency (CBDC) or digital rupiah will bring many positive impacts on the economy, particularly on the country’s payment system. He said there were at least three benefits of digital rupiah.
First, it will promote efficiency due to its circulation via digital blockchain technology platforms and distributed ledger technology (DLT). “We will circulate digital rupiah through the blockchain digital technology platform and DLT so the distribution will be efficient,” said Perry in a virtual press conference on Thursday, August 19.
Second, digital rupiah will slash transaction costs in banking services. “Bank transactions in the money market will be efficient and have zero transaction costs because banking is connected to the digital currency system.”
Third, Perry explained the digital rupiah would result in savings for the retail side because of low transaction costs. It will also offer fast transactions with the help of BI Fast and QRIS.
“There are many benefits of CBDC, in terms of transaction costs, transaction speed, and circulation of money in the economy. All of them boost efficiency, productivity, and economic growth other than being more inclusive for the financial economy,” said Perry.
However, Perry acknowledged that digital rupiah was not without risks. Thus, Bank Indonesia will continue to develop its risk management, including cyber security.
Zimbabwe Economy on rebound – The Zimbabwe Independent
THE Zimbabwe Independent today hosts a webinar on the Mid-term Monetary Policy presented a fortnight ago by the Reserve Bank of Zimbabwe (RBZ) governor John Mangudya, who is the keynote speaker.
The other panellists are Confederation of Zimbabwe Industries CE Sekai Kuvarika, Zimbabwe National Chamber of Commerce CE Christopher Mugaga, Institute of Chartered Accountants of Zimbabwe technical manager Owen Mavengere and development economist Chenayimoyo Mutambasere.
Watch this exciting conversation, whose theme is ‘Monetary Policy — A tool to solve economic problems’ on Heart and Soul Zim, Newsday and Zimbabwe Independent and Standard Facebookpages starting at 8am.
Below are excerpts from Mangudya’s policy statement:
Introduction and background
This Monetary Policy Statement (the Statement) comes at a time when the Government has ably shown steadfast commitment to sustaining the economic reform momentum. Despite the difficulties caused by the Covid-19 pandemic, the economy is on the rebound.
The close co-ordination between fiscal and monetary authorities, as shown by the sustained fiscal discipline and tight monetary conditions, coupled with the smooth operation of the Foreign Exchange Auction System, have fostered macroeconomic stability.
Accordingly, inflationary pressures in the economy have dissipated, thus creating a conducive monetary and financial environment essential to supporting the envisaged growth of 7,8% in 2021 and a robust economic growth in the medium term. The anticipated recovery of the global economy in 2021 and the spill-over effects of the stimulus packages in the developed countries and Asia, together with the soon to be availed SDR allocations of US$650 billion into the world economy by the International Monetary Fund (IMF), are expected to have a positive trickle-down effect on the country’s growth trajectory. The Bank is confident that the current stability of inflation and exchange rates, supported by a buoyant external sector performance, will continue in the outlook period.
The external sector performance has also been driven by strong recovery of the global economy, projected at 6% this year. The strong global economic recovery has resulted in a rally in international commodity prices, particularly of platinum, nickel and copper. Moreover, tobacco prices have been firmer at an average price of US$2,92/kg during the just-ended marketing season compared to the previous season where the average price was US$2,55/kg.
On account of the strong external sector performance, foreign currency receipts have remained buoyant, with US$4,02 billion having been received in the first half of the year, compared to US$3,12 billion received over the same period in 2020, representing a 29,1% increase in foreign currency supply into the economy. Of this amount, diaspora remittances received through the formal system amounted to US$649 million, an impressive 73% increase from US$374,6 million received during the same period in 2020.
These positive economic developments are key in sustaining the Foreign Exchange Auction System which has had a significant impact on the national economy since its inception on the 23rd of June 2020. Commendably, the Foreign Exchange Auction System which has to date disbursed US$1,72 billion has ensured uninterrupted financing of importation of key raw materials and equipment for the productive sectors of the economy.
Capacity utilisation in the manufacturing sector has, as a result, increased from 36% in 2019 to 47% in 2020 and is expected to further increase to above 61% in 2021. Against this background, this Statement which is issued in terms of Section 46 of the Reserve Bank of Zimbabwe Act [Chapter 22:15] reviews the monetary policy measures pursued by the Bank since the last Statement and outlines the new monetary policy measures to be followed by the Bank in the second half of the year.
Monetary policy measures
The obtaining macro-economic stability, which is expected to continue to be reinforced by the positive outlook on inflation and the balance of payments position, requires the Bank to stay the course and maintain its current monetary policy position which has had positive impact on the economy.
Accordingly, the following measures will anchor the Bank’s monetary policy stance for the rest of this year:
The Bank’s overnight accommodation of 40% and the medium-term lending rate for productive sector of 30% will be maintained in the short term, in order to control money supply and curb speculative activities. The Bank shall continue to review the policy rates in response to the downward inflation trajectory.
The 5% statutory reserve requirement for demand and call deposits and the 2,5% reserve requirement for time deposits will be maintained in the second half of the year. This differential reserve requirement system remains necessary as an incentive structure for banks to promote savings in the economy.
Quarterly target for the growth of reserve money for the remaining six months of 2021 remains at 20%. This is necessary to anchor inflation expectations at sustainable levels through controlling money supply and to allow for the necessary accommodation for the growth of the economy.
A cap on the interest rate at which banks can on-lend the proceeds from the Medium-term Lending Facility is also maintained at 10% above the borrowing rate to ensure recovery of the productive sectors of the economy.
The Bank will start to set aside foreign exchange resources to build the country’s foreign exchange reserves to anchor exchange rate stability and to cope with transitory exchange rate shocks in the national economy.
The Bank has put in place the following measures to deal with the residual foreign exchange auction allotment backlog:
Utilisation of the existing letters of credit facilities for the importation of strategic commodities and capital goods in order to lessen the demand on the Foreign Exchange Auction System;
Supporting banks to promote financial intermediation to leverage on the current long foreign exchange position of around US$1.7 billion in the banking system; and
Working closely with Government to ensure that some of the foreign exchange balances in the Exchequer Account are utilised to expunge the backlog.
The Bank is addressing the gap between the official and parallel exchange rates through tightening money supply, expunging the foreign exchange allotment backlog, increasing the attractiveness of the local currency so that the local currency complements rather than competes with the USD, discouraging rent-seeking behaviour and promote.
The Bank is satisfied with the achievements of the Foreign Exchange Auction System which have had a significant impact on the economy over the year it has been in operation. The Bank is thus continuing with the Foreign Exchange Auction System and is determined to strengthen the system to ensure that it reflects economic and market fundamentals of supply and demand.
The auction system is open to everyone for legitimate foreign exchange transactions through the bidding process. Bids are submitted through banks by individuals and entities that require foreign currency. It is a transparent system and the Bank is only administrator of the system and does not manipulate the auction system, neither does it participate on the foreign exchange parallel market.
The Bank shall therefore continue to foster compliance and enhance monitoring of the Foreign Exchange Auction System. As a public institution, the Bank shall also maintain its stance to enhance transparency and accountability in the operation of the Foreign Exchange Auction System.
The Bank is enhancing financial inclusion which is critical for inclusive growth through the development of the National Financial Inclusion Strategy Phase 2 (NFIS 2) for 20212025. The NFIS 2 will seek to address the challenges and gaps noted in the NFIS 1, with more focus on usage, digital financial services, quality of financial services, fintech and product innovation, financial inclusion data disaggregation and sustainability.
The economy is rebounding on account of the stable macro-economic conditions. Both the external and real sectors of the economy are expected to remain strong in the outlook period. We, therefore, need to stay the course and consolidate the current economic policy measures for stability and sustainable growth of the economy.
The expected positive growth of the world economy, supported by stimulus packages in the developed countries and Asia and from the IMF will buttress Zimbabwe’s economic growth trajectory. In addition, the expected increase in commodity prices on account of increased global demand will enhance the country’s export performance, notwithstanding the expected rise in global inflation which will have moderate pass-through effects to domestic inflation.
The Government has put in place elaborate measures to deal with the Covid-19 pandemic including the vaccination programme, which is one of the best in Africa. Thus whilst the economic outlook is positive, concerted efforts to continue mitigating the negative effects of the Covid-19 pandemic on the economy remain paramount to maintain the current positive economic trajectory.
Overall, the economy is on the right track. It is rebounding. The outlook is positive on account of the remarkable hawkish monetary policy stance being pursued by the Bank, Government’s strong fiscal sustainability and the positive global financial developments.
This stable and positive macroeconomic environment points to the need for the Bank to continue with its current monetary policy stance to support the robust economic growth of at least 7,8% in 2021, while continuing to reduce annual inflation to the desired level of around 30% by the end of December 2021.
Al-Kazemi will visit Kuwait next week
It is hoped that Prime Minister Mustafa Al-Kazemi will visit the State of Kuwait next week.
And the Ministry of Foreign Affairs said, in a press statement, that the Iraqi ambassador to Kuwait, Al-Manhal Al-Safi, met with the head of the Kuwait Chamber of Commerce and Industry, Muhammad Jassim Al-Saqer, and they touched on a number of topics, “including Al-Kazemi’s visit to Kuwait next week, and a meeting was held with Kuwaiti businessmen in order to Kuwaiti investors entered the Iraqi commercial market and played an active role in sustainable development and industrial and commercial investment.
The two parties discussed, according to the Ministry of Foreign Affairs, ways to develop bilateral trade between the two brotherly countries, in light of a real desire to develop bilateral cooperation at various levels and fields. link
Source: Dinar Recaps
As Afghanistan Reverts, Iraq Makes Steady Progress – WSJ
The Afghan army’s failure to slow the Taliban’s seizure of power contrasts starkly with generally favorable developments in Iraq. As Afghanistan descends into the abyss, Iraq advances toward legitimacy at home and internationally.
After years of fitful leadership, extremist threats, sectarian violence and Iranian interference, Iraq is on course to becoming a self-reliant, democratic state and, at least for now, an impediment to Iranian regional aggrandizement. America’s efforts, sacrifices and patience in Iraq are paying off.
The U.S. found no weapons of mass destruction in Iraq. What it did find was a homicidal regime under Saddam Hussein, and the debris of a sectarian army whose mission had been to brutalize the Iraqi people. Arabs and Kurds were on the brink of war. Though rich in oil and gas reserves, Iraq’s economic development had been stunted by state involvement designed to enrich those in power. The rule of law meant nothing but total obedience to Saddam.
Conditions in Iraq in the wake of invasion may have seemed hopeless, with a spreading Sunni insurgency, the arrival of foreign terrorists, and Sunni-Shiite violence. Still, the U.S. and 35 partner nations worked with Iraqis of all political stripes, religious beliefs and regions to help build representative government responsive to the needs of all Iraqis.
The first step was to help the Iraqis write a new constitution that provides for a separation of powers among branches of government and establishes basic rights for all Iraqis, irrespective of sect, ethnicity and sex. It obligates the Iraqi state to the rule of law, an independent judiciary, civilian control of the armed forces and universal suffrage. The constitution says that no less than 25% of parliamentarians be female, and it opened the way for Iraqi women to receive educational and professional equality, though in Iraq as elsewhere, words must be followed by actions.
Iraq’s constitution came into force after it was overwhelmingly approved in a national referendum in 2005. Since 2004, Iraq has had five straight peaceful transfers of power. Although its governments have performed unevenly—some poorly—none has clung to power when its time was up. A notable example is how Nouri al-Maliki, pro-Iran prime minister from 2006 to 2014, was succeeded without conflict by Haider al-Abadi, a less pro-Iran figure from a different party. This record is unmatched among Arab countries and defies pundits’ predictions that Iraqi democracy would fail.
Source: Dinar Recaps
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