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“FSL will be the Catalyst” – Tues. AM-PM KTFA Thoughts/News 5-31-22

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Samson » May 31st, 2022

The Federal Reserve is divided in its orientations .. regarding the creation of a digital dollar?

30th May, 2022

Federal Reserve Vice Chair Lyle Brainard told House lawmakers that a US central bank digital currency could one day provide consumers with a level of security, amid the proliferation of privately issued digital assets such as stablecoins.

In the future, Brainard told the House Financial Services Committee, a central bank digital currency could co-exist with stablecoins, and complement them by providing widely available, government-backed payment methods.

“It can provide a secure commitment to the central bank as a neutral settlement layer in the digital financial system,” she added, noting that “it would in fact facilitate and enable private sector innovation.”

Brainard’s comments come as the Federal Reserve discusses a possible new form of money to keep pace with private sector payment innovations, including stablecoins, a type of cryptocurrency intended to be pegged to the dollar or another national currency.

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Unlike private cryptocurrencies, such as “Bitcoin”, the central bank digital currency issued by the Federal Reserve will be issued and backed by the US central bank, a government entity, as well as US banknotes and paper currency.

This idea divided Federal Reserve officials, making it unlikely that they would soon decide whether to create a digital dollar.

Stablecoins gained renewed interest from regulators this month after the TerraUSD coin, at the time one of the largest stablecoins, saw its value drop below the dollar.  LINK

Source: Dinar Recaps


TIVON » May 31st, 2022

Listening to the call (Monday Night KTFA CC) I presume given that both the Food Security Law & The 2022 Budget Law share a rate that can be allocated to areas of projects and investments by tapping into the savings/reserves once the F.S.L. is voted on can utilize or disseminate the Ration Cards among the citizens. As both are considered by Mazhar legitimate legislation. 

And they the citizens can receive “Purchasing Power” prior to the government being seated since it was stated it (FSL) can hold them over until the 2022 Budget is open.

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If I am correct in that assessment I anticipate that a final vote of the F.S.L. will be the catalyst to reinstate the exchange rate even before the formation of the government is what I take from the information as of late.

Why? Because a parliament member commented on why they were willing to forego the 2022 Budget temporarily all together if they pass the F.S.L. so the citizens can afford basic necessities while they figure out who will be a part of the government.

So with that said I personally expect that a rare should be revealed shortly after the session tomorrow when they pass the F.S.L.. If anyone disagrees please tell me what’s your perspective on this topic. Because aren’t they using the surplus from oil to finance both Food Security & The 2022 Budget?

I remember the three main areas were…
Food Security
Poor Classes
Investment Projects

So with that said and how tomorrow will shape up could be two separate events that collide or conjoin concurrently in unison one action towards releasing a new exchange rate once the 2nd/3rd Reading is done on the F.S.L..

This is what gives it it’s excitement and anticipation as to the results of the session tomorrow. They found a way to work around the political blockage that Al-Zamili stated was not causing obstruction to get things done in a legislative manner that brought us to where we are now.

I do not see how this week is shaping up to slow down anything forthcoming in regards to the entitlements the citizens have waited for long enough. IMO  

Samson » May 31st, 2022

Finance Committee: The proposal for the emergency support law will be passed by a majority

30th May, 2022

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Monday, the Parliamentary Finance Committee confirmed that the emergency support law will be passed a week after the second reading, while noting that the Ministry of Health requested the allocation of 1.3 trillion dinars to its budget within the law.

A member of the committee, Sattar al-Atabi, said, “The committee hosted stakeholders regarding the proposal for the emergency support law,” noting that “the members of the committee are determined to discuss the provisions of the law until it is properly matured.” He added, “We are trying to pass the law within a ceiling of 25 trillion dinars,” noting that “there are no obstacles or impediments regarding the law.”

He continued, “The Ministry of Health requested the allocation of 1.3 trillion dinars to its budget within the emergency support law,” noting that “the law will be presented tomorrow for the second reading and will be voted on a week after the completion of the second reading.”

And he indicated that “the law will be passed by a majority of two-thirds of the members of the House of Representatives,” warning “some political parties against putting the law into the political conflict.”

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TIVON » May 31st, 2022

The Ministry of Health requested the allocation of 1.3 trillion dinars to its budget within the law. Very key statement made here as you look back on the multiple articles stating Food Security Law & 2022 Budget are synonymous.

The request should imply that the allocations will also go towards the Ration Cards as well which is VISA/Master Card which would require a rate if citizens are looking to afford food, products, and services due to the high prices if I am not wrong on the assessment given that all of this will come from the Oil surplus?

 But do they have to release the exchange rate to utilize that surplus is the primary question I hope can be answered soon now that it is a week out from passing.

Because after all isn’t this “The Big Cheese” in terms of funds avaliable within the law? What investment projects in Iraq that will generate income? If so shouldn’t this income come with “Purchasing Power”?

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Aren’t certain members of the government looking to pass laws without the formation of the government? Would the Food Security Law qualify? If so why not the 2022 Budget which Al-Kazemi could have legal grounds to pass if granted the authority. Oil & Gas Law should also go down the same route.    IMO

Samson » May 31st, 2022

Parliamentary Finance announces the allocation of 10 trillion dinars for the development of the regions within the emergency support

31st May, 2022

Today, Tuesday, the Parliamentary Finance Committee announced the allocation of 10 trillion dinars for the development of the regions within the law of emergency support for food security and development

Committee member Ikhlas al-Dulaimi told the Iraqi News Agency (INA): “The committee hosted the committees of the regions and the migration and the displaced to find out the needs of the provinces, regions and the displaced,” noting that “the emergency food security support law allocated 10 trillion dinars for the development of the regions, except for the petrodollar

She added that “the law did not allocate any funds to immigration and the displaced,” stressing the need to “find financial allocations to the displaced within the emergency support law because the camps suffer from major problems

And she added, “The law can change completely or some of its parts after the second reading, and there are observations made by committees and specialists,” explaining that the law is preliminary and will be discussed and amended during the upcoming sessions 

TIVON » May 31st, 2022

1.) Will the “Food Security Law” create “Purchasing Power” for citizens?

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2.) Will the rate change occur once the F.S.L. is voted on and passed?

3.) Do we have to wait for the Oil & Gas Law to see a new exchange rate?

4.) Do we have to wait until the 2022 Budget is open to see the reinstatement of the Dinar?

5.) Do we have to wait for the formation of the GOI in order to see the release of the new small category notes?

6.) Do we have to wait until the ATM machines are set up locally/Internationally in order to see the rate on the Forex Market?

7.) Is Iraq waiting for the Gold Standard so they can peg the Dinar to precious metals? 

These are the lingering questions that some ponder about in the midst of all of the political jargon as we march towards another month without none of the above occurring thus far. How close are we really?  The summer is now upon us as the saga of the Iraqi Dinar continues. What will be in store for us this coming June?    IMO

GodLover » May 31st, 2022

I will try to answer these questions imo

1) No imo. The FSL was created to be used to give their citizens immediate relief until the 2022 budget is passed & opened. The FSL is synonymous (similar) to the 2022 budget, because it has a budget of it’s own. As well, the FSL has money set aside from oil rise surplus to fund the FSL. I think the FSL is good for the citizens in the short term, but it takes away from the 2022 budget.
2) Again, no, I don’t think that is realistic.
3) I would hope the oil & gas law gets worked out in time prior to the 2022 budget opening. As far as it being required prior to a rate change, it would certainly be beneficial to their citizens.
4) Yes imo. The FSL & the 2022 budget are separate animals, but are similar (synonymous) because they both have a budget.
5) Certainly a new GOI is needed imo. Or for the current to be given full authority. As far as the NSCN’s, I would think they would be released simultaneously with the MR or shortly after. Prior to the monetary reforms release would be pointless.
6) Honestly, I would think the ATM’s would not be an issue
7) As I have said before, when Iraq is ready…..it will happen. 

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TIVON » May 31st, 2022

I couldn’t post my last few questions as this last one is the wildcard given it hasn’t been defined as a priority just yet. And that is the “Citizens Entitlements”.

 What falls under this? Because this is also apart of the Food Security Law. Is it the Oil & Gas? Purchasing Power? Because this puts all those other questions in perspective. The final vote is a week out. What will they add to the law that will warrant a rate change that is conducive to the entitlements the citizens are seeking?

They stated that  The House of Representatives assessed the criticality of the financial situation and the need to provide the necessary funding to address basic expenses and aspects that directly affect the livelihood of the citizen and the food basket, support for strategic storage and the poor classes, in addition to paying the dues of farmers and farmers in order to support the local product and reduce dependence.

What would this require if they are speaking on the livelihood of the citizens? What is the one thing that can produce a daily advance towards a stable life for an Iraqi? The Oil & Gas Law right? Well if that is a yes this would fall under the Food Security Law.

Didn’t they state they are trying to pass laws without a formation of government? Because at this point the formation of a government is a formality and not a requirement. Because some in parliament and the House of Representatives do not see it as a priority to get things done on behalf of the citizens.

The Finance Committee is looking to revitalize the entire economy with the FSL. How can they begin to do this without a 2022 Budget? Someone seems intent on using the FSL to accomplish many things. Including a rate change.  IMO.

Samson » May 31st, 2022

Deputy: We are studying passing laws without waiting for the formation of the government

31st May, 2022

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A member of the “Save the Homeland” coalition, MP Ahmed Mazhar al-Jubouri, said on Tuesday that alliances are still suspended and dialogues are “frozen”, and there is nothing new in light of the political blockage.

Al-Jubouri added in an interview with the official “Al-Sabah” newspaper, which was followed by Mawazine News, “In parliament, we have started studying options for passing laws without waiting for the formation of the government.”

He explained, “If the problem is to dissolve parliament, we are ready for the constitutional text, and the parliament must dissolve itself, and thus represent the will of the Iraqis, and when there are real popular demands, we are ready to go in this direction.”

Al-Jubouri indicated that “the Alliance to Save a Homeland was determined from the first moment to achieve a national project that differs from the old projects, or to start an initiative that there would be a majority government plus a constructive national opposition, not a destructive one.”

He continued, “Therefore, if the Alliance to Save a Homeland is on one side, it is not a problem, because it aspires to be a political project and not an electoral project for the president of the republic or the formation of the government.”  LINK

TIVON » May 31st, 2022

Could they be referring to the “Oil & Gas Law”? Hmmmmmm. Because I am positive you will have antagonist forces stiff arming this movement to get the HCL going. Hopefully this is not another fight we have to sit through as we wait out a week for the Food Security Law to pass.  IMO

Source: Dinar Recaps


Samson » May 31st, 2022

The European Union removes the largest Russian bank from the “SWIFT” system

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31st May, 2022

The 27 countries of the European Union agreed, during a summit in Brussels, to exclude “Sberbank”, the largest bank in Russia, from the SWIFT system for international money transfers.

This comes within the framework of the sixth package of European sanctions against Moscow over the “attack” on Ukraine.

“This package of sanctions includes tough measures such as excluding Sberbank, Russia’s largest bank, from Swift,” said European Council President Charles Michel.

Sberbank is the largest bank in Russia, as it controls about a third of the country’s banking sector. LINK

Russia’s Sberbank declares that it is “operating normally” and that its exclusion from the “SWIFT” system has a limited impact

31st May, 2022

Russia’s Sberbank confirmed, on Tuesday, that its exclusion from the SWIFT system for international money transfers, based on the European Union’s decision, will have a limited impact.

“We are operating normally – the main restrictions are already in place,” said the bank, which has previously been targeted by US and British sanctions. He added that “the exclusion from the SWIFT system does not change anything in the situation with regard to international payments.” He stressed that “the internal operations in Russia do not depend on SWIFT, and the bank will implement them normally.”

The United States imposed strict restrictions on Sberbank; In early April, it froze all of his assets “associated with the US financial system” and prevented him from conducting transactions with US actors. The United Kingdom also froze the assets of Russia’s largest bank.

On Monday evening, the 27 member states of the European Union reached an agreement on a sixth package of sanctions against Russia due to its operation in Ukraine, which includes reducing its imports of Russian oil by 90% by the end of this year, adding 60 additional individuals to the European blacklist, and excluding Three Russian banks are part of the SWIFT system for international money transfers, including Sberbank.

The “Swift” system is considered one of the largest financial and banking messaging networks, and it allows the transit of payment requests between banks, requests to transfer bank customers’ funds, requests to buy and sell securities, and others. Sberbank is the heir to the savings banks from the tsarist era, and almost all Russians have an account in it.  LINK

Russian Central Bank: All countries of the world will rethink the risks of the dollar and the euro

31st May, 2022

The Russian Central Bank reported that the West’s precedent of freezing part of Russia’s international reserves will prompt other countries to rethink the risks of placing their reserves in dollars and euros.

The Russian Central said that “the precedent of freezing the gold and foreign exchange reserves of the Bank of Russia (the Central Bank of Russia) will lead to the fact that the central banks of the world will rethink the risks of placing their reserves in US dollars and the euro. It is possible to expect an increase in the demand for gold and a decrease in the role of the dollar and the euro as reserve assets.”

After Moscow launched a special military operation in Ukraine, Western countries imposed sanctions on Russia, affecting companies, individuals and economic sectors, and within the framework of the sanctions, Russia’s international reserves estimated at $300 billion were frozen.

Earlier, Russian President Vladimir Putin warned Western countries against confiscating Russian property abroad, and said that “stealing other people’s property never leads to good.”

“Violation of rules and norms in the field of international finance and trade does not lead to anything good,” Putin said. In simple words stealing other people’s property has never done good to anyone, especially those who are involved in this unseemly act.”  LINK

Get ready for reverse currency wars

31st May, 2022

Over the past year, the US dollar has appreciated against the euro by 12%, and at 0.93 to the euro, it is close to parity. If oil and other dollar-denominated commodity prices look high now, they look even higher in euros. 

With the value of the US currency rising, and inflation in many countries at levels not seen in decades, we may now be entering so-called “reverse currency wars” – where countries compete to enhance the value of their currencies against foreign currencies.

Originally, the term “currency wars” was a decorative description of what international economists have long called “competitive devaluations” or, after floating exchange rates began in the early 1970s, “competitive depreciations.” 

In these situations, countries feel aggrieved that their trading partners deliberately pursue policies aimed at weakening their currencies in order to gain an unfair advantage in international trade. 

Competitive devaluation may arise when all countries’ major macroeconomic objectives, in addition to maximizing GDP growth and employment, include improving their trade balances. This generally describes the last few decades in the global economy.

On the other hand, reverse currency wars involve competitive currency appreciation. Here, countries imagine that their trading partners are deliberately trying to strengthen their currencies in order to rein in inflation. This could describe the period that began in 2021, when inflation returned to pose a severe problem in most countries.

In either case, it is impossible for all countries to pursue such strategies, because it is not possible to move exchange rates in the same direction simultaneously. Competitive devaluation or valuation is often seen as evidence of a lack of international cooperation to stabilize exchange rates, which sometimes causes calls for a new Bretton Woods-style arrangement for greater policy coordination.

The United States has often been quick to claim that other countries’ currencies are unfairly undervalued. Since 1988, Congress has required the Treasury to submit semi-annual reports on whether America’s major trading partners are manipulating their currencies. China and other Asian countries are the most common targets. But Switzerland, too, has always been in doubt, even though the Swiss franc can easily be considered the most expensive major currency by other standards.

In February 2013, the US Treasury took charge of a micro-form of the Bretton Woods agreement under which the G7 countries would refrain from taking any steps to devalue their currencies. In fact, the 2013 agreement is unknown to many, but it worked. Over the last decade, the G7 member states have not intervened to sell their currencies in the foreign exchange market.

As for China, which is not a member of the Group of Seven, it intervenes in the currency market. But since 2014, it has been doing so to slow, not encourage, the renminbi’s depreciation.

The phrase “currency war” was coined in 2010 by Brazilian leaders to protest the monetary policies of the United States, Japan, and other countries. They did not accuse the US Federal Reserve or the Bank of Japan of openly devaluing the dollar or the yen, or interfering in the foreign exchange market to push the two currencies down, but rather of adopting excessively accommodative monetary policies. 

Brazilian policymakers claimed that their American and Japanese counterparts cut interest rates to zero and then made matters worse by introducing quantitative easing, deliberately devaluing the dollar and the yen, thereby boosting net exports, and exporting unemployment to their trading partners.

Similarly, no one today is accusing the US authorities of using foreign exchange intervention to raise the value of the dollar. Rather, the complaint revolves around the fact that the current interest-rate increases by the Federal Reserve are attracting capital inflows to the US and strengthening the US currency, leading to higher international interest rates and thus keeping global growth below its potential.

Fears of competitive devaluation are not without historical precedents, most notably in the 1930s, when major powers devalued their currencies against gold and thus against each other. But is there also precedent for competitive valuation?

Some observers have claimed that the early 1980s provided just such antecedents. When the Federal Reserve, led by Paul Volcker, decided to raise interest rates sharply to combat inflation, he knew that the appreciation of the dollar would help him in this task. But the corresponding depreciation of the currencies of US trading partners exacerbated their inflation rates and forced them to raise interest rates as well.

The most likely victims of today’s euro appreciation are not the other big rich countries, but the emerging and developing economies. Many of them have large dollar-denominated debt, which has been exacerbated by the fiscal spending required to combat the COVID-19 pandemic. When the value of the dollar rises, the costs of debt servicing in local currencies increase. The combination of rising global interest rates and a stronger dollar could trigger debt crises, as happened in Mexico in 1982 and 1994.

But not all fears of competitive currency appreciation are justified or worth reforming the international currency system. Unlike most central banks, the Bank of Japan maintained a very loose monetary policy throughout the past year, continuing its long-running campaign to increase growth and inflation. So, while the Federal Reserve is raising interest rates in an attempt to slow the rate hike in the US, Japanese interest rates are still zero or less. As we expected, the widening interest rate differential has caused the yen to depreciate by about 15% against the dollar over the past year.

On the whole, such a large change in the exchange rate of the dollar against the yen is not a real problem. It pushed prices up in Japan while putting pressure on inflation in the United States. This is what both countries have been striving to achieve. Floating currencies allow each country to pursue monetary policy that suits its own circumstances.

But with high global inflation likely to persist for some time, the odds of counter-currency wars rise. Instead of racing to the bottom in the foreign-exchange market, we may see a rush to the top – and the poorest countries are likely to suffer the most in the process.   LINK

Oil continues to rise, recording 123 dollars a barrel

31st May, 2022

Crude oil prices rose today, Tuesday, after the European Union agreed to reduce oil imports from Russia by the end of 2022.

The decision raised supply fears amid increased demand ahead of the peak summer driving season in the United States and Europe.

Brent crude futures for July were at $1.45 to $123.20 a barrel at 04:40 GMT. US West Texas Intermediate (WTI) crude futures were trading at $118.49 a barrel, up $3.42 from Friday’s close. LINK

Source: Dinar Recaps

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