Economists call for the elimination of dollarization of the Iraqi economy
Iraqi economists called on state officials to eliminate dollarization in the economy, in order to meet the growing demand for the dollar currency.
And the Central Bank of Iraq launched a series of measures to counter the rise in the exchange rate of the dollar against the dinar, including the settlement of private sector trade between Iraq and China, in the yuan currency through the American JPMorgan Bank.
The economist, Mahmoud Dagher, told Al-Iqtisad News that businessmen and importers have begun to increase their numbers to go to banks to obtain dollars to cover imports, and this is a very important step that will contribute to reducing the demand for dollars in the parallel market.
He added that selling goods in foreign currencies inside the Iraqi market increases demand, and this is called dollarization, a procedure that shakes the citizen’s confidence in his currency.
On the other hand, economist Aqil al-Ansari told Al-Iqtisad News that the state must control dollarization by preventing the sale of goods in the local market in dollars or any other currency except for the Iraqi dinar.
He stressed that this matter will lead to reducing the demand for the dollar, and therefore the dollar will go to the main needs to cover Iraq’s imports of goods, indicating that the last consumer must pay in the dinar currency, while the main importer is the one who buys the dollar from the banks.
He pointed out that what is happening now is the organization of foreign trade for Iraq, which is a very important measure for the Iraqi economy and ends the chaos that was taking place. link
An economist explains about replacing the dollar with the yuan in dealing with China
Economic expert Abd al-Rahman al-Mashhadani explained, on Saturday, the process of trade exchange with China in yuan instead of the US dollar, while stressing that the process will be under the supervision of the Singapore Development Bank and the American J Morken Bank.
Al-Mashhadani said in an interview with Al-Maalouma agency, “The decision came to facilitate the process of transferring money to China to finance trade and reduce auditing procedures,” noting that “the Chinese yuan is considered one of the global currencies that can be relied upon in all countries of the world.”
He continued, “The decision is part of the options to diversify the financing of Iraqi trade with the major countries of the world,” noting that “the mechanism will be in two ways, the first is: making part of the oil export money block to Iraq in Chinese yuan, on the basis of which commercial transactions will be settled, and the second It is: they give dollars to these banks in order to obtain Chinese yuan for trade financing purposes.”
And he added, “The purchase process for Iraqi merchants will be by buying dollars from the electronic platform, and the money is transferred to China in yuan to finance import purposes,” noting that “Iraq’s problem with regard to the dollar is the merchants’ lack of commitment to the official transfer process through the electronic platform so far.”
And the Central Bank of Iraq had announced earlier about the second package of facilities to obtain foreign currency, including reliance on the yuan currency to organize the financing of foreign trade from China link
Is Saudi Arabia preparing for the collapse of the petrodollar and US dollar dominance?
One of the most illusory phenomena in our current existence is the money we use for buying, selling and hoarding on a daily basis. It is, to put it simply, in the air, backed up by nothing and reliant on nothing, yet at the same time highly delicate and sensitive to geopolitical and monetary shifts.
The currencies we all use are reliant on the strength and performance of the US dollar, and that dollar is backed up by debt and the global trust in itself and its delicate monetary system. There was a time, half a decade ago, when the dollar and other prominent currencies were backed by gold, that secure and stable asset largely immune to the wild swings and falls of today’s debt-based system.
That was until US President Richard Nixon took the dollar off that gold standard in 1971, in a pivotal and momentous move which both secured America’s supremacy in the global economy – at least until now – and deemed Washington and the subsequent monetary system to a future of inevitable crashes, and many say an eventual collapse.
Since then, especially in this digital age, fiat money consists of little more than digits on a screen, based on a system of automated calculations and manual interventions. Businesses procure money and employees are paid it, yes. Consumers spend it and it is essential to survival and attaining basic necessities, true. Yet the fact remains that at any time, the amount can be seized, altered, or removed from an account with little immediate impact on an economy, as it is not backed by any material or tangible assets subject to limitations.
We deal with mere numbers on a screen, which a bank can quite literally edit at will. With physical cash, this is not entirely the case, but even that is subject to that reality. As our world becomes ever more digitalised and less reliant on cash, this will only grow. As the Wolf of Wall Street popularised, our current monetary system, along with its markets and stocks, are simply “fugazy”.
A major part of that system and America’s hegemony over it, of course, has been the ‘petrodollar’ – the payment of US dollars for the trade and sale of oil globally from Saudi Arabia and other member states in the Organisation of the Petroleum Exporting Countries (OPEC) – following the deal struck between Washington and Riyadh in 1974, coincidentally a mere three years after Nixon took the dollar off the gold standard.
That deal not only secured military defence of the kingdom through guarantees by the US, but also secured a stable stream of foreign purchase of US Treasury bonds and debt – a strategy of recycling the petrodollars back unto Washington – through the Gulf state’s reserves. Like any good business, that stable stream successfully resulted in many more streams of reserves, powered by the subsequent rolling success of the dollar and the increase of global trust in its stability. It was one of the machine’s most essential components.
So when it was revealed last year that Saudi Arabia is considering trading its oil with China in the yuan, it was no small matter or minor shift. Many analysts at the time – largely pro-Western – played it down as merely a symbolic gesture, a tactic to pressure the US or send a political message. Almost a year on, however, the kingdom seems to be serious in those potential intents. At Davos in January, Finance Minister Mohammed al-Jadaan revealed Riyadh’s willingness to trade in not just the yuan, but also a variety of other currencies.
Saudi Arabia has not been the only country, as other considerable US allies such as India, Pakistan, and UAE have also struck deals with Russia or China to pay for oil or other commodities in their various respective local currencies. Iraq was the latest to distance itself from dollar dominance, announcing this month that it plans to regulate foreign trade from China directly in yuan.
Those states’ decisions – predicted soon to be joined by many more – have represented a huge shift towards a more decentralised global monetary system away from the dollar, primarily due to a major miscalculation by Washington in its hard-hitting sanctions against Russia at the outset of Moscow’s invasion of Ukraine.
Without defending the Kremlin and its so-called ‘special military operation’, and without condemning sanctions which do have their uses as a non-physical measure and financial pressure, the US seems to have scored a devastating self-goal against its currency when it cut Russia off from the SWIFT payment system and froze over $350 billion of its gold and foreign exchange reserves. That act alone massively reduced trust in the dollar-based monetary system amongst many countries, especially those in the Global South which have long been sceptical of US hegemony, causing them to further question the viability and risk of holding their reserves in the mighty dollar.
That is exactly why the Ukraine war is such a pivotal issue – it is a gamble the US is willing to take to re-secure the dollar’s fortunes, having the potential to restore trust in it as a stable currency worthy of remaining the dominant global reserve exchange. That is if Ukraine wins and lands a Russian defeat. If Kyiv loses and Moscow scores a victory, though, it would spell a further disaster for the dollar. There lies one of the primary reasons why so much is reliant on the results of the war in Ukraine.
In that equation, Saudi Arabia does not intend to rely on the outcome of the war to determine its foreign and economic policies. It insists on maintaining excellent relations with the US while at the same time expanding its ties with Russia, China, and other powers to the east. it will continue to trade largely in dollars in the foreseeable future, but will at the same time be open to accepting other currencies even if that comes at the apparent expense of American hegemony and represents a breach of the petrodollar agreement with Washington all those decades ago.
The kingdom’s interest in joining BRICS – the economic bloc consisting of Brazil, Russia, India, China, and South Africa – is part of that policy outlook, along with Iran’s, Turkiye’s, Algeria’s and Egypt’s who also aim to join the bloc. Rather than an exclusive club for the developing world’s fastest-growing economies, they view BRICS as an opportunity for countries in the Global South to band together to either match the dominance of the US dollar or secure a place in the attempt to do so.
Due to discuss the expansion of the bloc this year, BRICS is soon to decide on the potential membership of those nations. If Saudi Arabia is accepted and joins it, it would be hailed as a momentous blow to the dollar and the end of petrodollar recycling, as the kingdom would then be more economically interconnected with the likes of China and India in particular.
Already, analysts and economists are speculating on potential of countries selling their US dollar reserves, particularly the effects of a mass dump by some of the most prominent holders. China, for instance, is the largest at $3.184 trillion in reserves, while India’s numbers $573.7 billion and Saudi Arabia’s $457.66 billion. If they were to sell or drop even a fraction of their reserves, especially in a coordinated effort, it would severely dent the US dollar’s strength and reputation even further.
This is not certainly not the first time the American currency’s dominance has been threatened, nor is it the first time total global dollar reserves held by central banks have dropped significantly, as they have been declining for the past two decades or so and were at some of the lowest levels even prior to the Ukraine war.
Now it is different, however, and there has never been a threat to the dollar’s supremacy as significant as this. There is a good reason central banks throughout the world last year bought the most gold on record since 1950, in an effort to combat rising inflation and financial instability. They know best the fragility of our precarious monetary system, as they aim to stabilise themselves with the asset that would forever remain valuable.
Whether the counter to the US dollar will be the yuan, a BRICS currency, or some other gold or asset-backed currency in the future, Saudi Arabia sees that the current global reserve may be on the decline for good. The kingdom is preparing to diversify its reserves and trade practices for whatever may lay ahead. link
The Rise of BRICS: The economic giant that is taking on the West
Source: Dinar Recaps
Iraq said they now have dollar price stability. Now, a quick review for the people on how their new currency will work, and then go to 1 to 1 and put it on forex.
Disclosure of prior parliamentary consensus to approve the budget
The representative of the State of Law Coalition, Ahmed Al-Watifi, confirmed, on Sunday, that the governments of Baghdad and Erbil will soon reach an integrated road map to resolve the crises, indicating that parliamentary consensus exists and is awaiting the budget to be passed.
Al-Watifi said in an interview with Al-Maalouma Agency, “The budget agreement is in its final stages, and we are optimistic about reaching an agreement that can be implemented within the House of Representatives.”
He added, “There are understandings between the political blocs on the need to pass every law that provides service to the citizen and not obstruct it within the House of Representatives.”
He pointed out that “there are positive indicators and understandings to move forward in resolving the differences and outstanding issues between Erbil and Baghdad,” noting that “the negotiations reached a set of understandings between the two sides to resolve the differences and outstanding issues between Erbil and Baghdad.”
Earlier, the representative of the Kurdistan Democratic Party, Jay Taymur, revealed the scenes and developments of the recent meetings and negotiations that took place between the federal government and the delegation of the Kurdistan Regional Government regarding the oil and gas law, the share of the region, and ending the outstanding differences, stressing that the agreement is almost in place between the two parties.
Source: Dinar Recaps
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