Towards a new global financial system
The world is preoccupied these days with the acceleration and development of events, especially the BRICS group’s preparations for holding its conference scheduled for the middle of this month.
This comes amid speculation that the new BRICS currency may be approved as a competitor to the dollar in commercial transactions and global monetary reserves.
Here, the debate revolves around whether the BRICS group was able to extract the dominance of the dollar in world trade and compete with it.
The BRICS group includes China, Russia, India and Brazil, which was formed in 2009 and a year later, in 2010, South Africa joined it. This economic bloc is important because it constitutes 44 percent of the world’s population and 30 percent of global production and aims to abandon the use of the dollar in exchanges trade in a new single currency for those countries.
It is worth noting that the dollar is the only currency traded in commercial exchanges since World War II.
What are the reasons for this cluster?
Most experts and locals unanimously agree that America’s strict policy in its dealings with countries and its imposition of continuous sanctions has prompted these countries to think and search for a way to get rid of this hegemony.
Reports based on facts on the ground indicate that there are 19 countries, some of which have expressed their desire to join this bloc, led by Saudi Arabia, Egypt, Turkey, Iran, Mexico and Indonesia, and some of which are monitoring and interested in developments.
It is expected that the BRICS group will discuss in its conference, which will be held during these days, the possibility of opening acceptance of countries’ applications for membership in this bloc, the principles and procedures for joining and issuing a unified currency.
And if the BRICS currency is approved, what will be the impact of this on the dominance of the dollar?
In order to show the impact of this currency, it is necessary to trace the impact of the euro, which was approved by the European countries in 1999. It achieved 36 percent of the global currency reserves, and reduced the share of the dollar, which constituted 90 percent of the global currency reserves.
Forecasts indicate that the BRICS currency will account for more than 30 percent of the global monetary reserve at the beginning of its launch at the expense of the dollar in commercial transactions around the world, and you can imagine the size of the impact in reducing the role of the dollar in the future and in the medium and long term.
From here, the picture becomes clear that the expectations of experts towards a new financial and economic system will inevitably come, and it is based on diversifying the global monetary reserve to limit the dominance of the dollar. Questions and debate will continue until the new system’s working mechanisms are launched.
What concerns us here is where is Iraq from these developments?
Here I would like to point out that the interest of those countries in their local currencies and their pride in them encouraged them to stand up to the power and dominance of the dollar in controlling their destinies, and although the BRICS will compete with the dollar and reduce its value in commercial transactions, they cannot completely remove it from the scene, and for this there are many reasons.
The government must pay attention to these developments and changes that occur in the global system and the need to draw up a balanced policy to deal with future expectations, with certainty that the Central Bank of Iraq closely monitors these developments and collects and analyzes information.
Here, we call for the importance of working on adopting the idea of diversifying the monetary reserve due to its importance in preserving the future of the country’s economy. link
Framework: The passage of the oil and gas law is the first sign of resolving the differences that threaten the political Process
MP for the Coordination Framework Jassim Atwan, on Tuesday, stressed the importance of negotiations between the various political parties to reach compromise solutions on the oil and gas law, pointing out that the legislation of the law would eliminate differences, differences and privileges over the distribution of oil wealth.
Atwan told Al-Maalouma that “there is a possibility for the political parties to go towards negotiations and talks with the region to reach compromise solutions to the current stage on the oil file.”
He added, “Iraq needs an understanding on the oil and gas law to ensure a solution to problems between all parties, as well as the stability of the political process and an end to the existing differences over the oil file, especially between Baghdad and Erbil.”
And Atwan said, “The law would eliminate the granting of privileges to some parties over others, in addition to being a key to resolving the differences that threaten the political process.”
‘Our dinar’. A campaign to return the dollar exchange to its normal rates
Baghdad – NAS
Specialists in financial affairs believe that the return of the dollar exchange to its normal rates needs to adopt the slogan “Our dinar”, calling at the same time for the concerted efforts of government institutions, the private sector and the media to support dealing with dinars exclusively, and to leave dollar transactions.
Financial affairs expert Suha Al-Kafaei confirmed in an interview with the official newspaper “Nas”, (August 8, 2023): “The stability of exchange rates in the local market requires participatory solutions between the citizen and the trader, as the reality of transactions needs to be converted to the Iraqi dinar instead of the dollar for all transactions without exception, and this will reduce the demand for the dollar, as the trader in dinars goes to the bank to obtain the dollar for the purpose of importing at a price of 1320 dinars against the dollar, and from here the demand for the dollar can be reduced in the parallel market.”
The private sector has flexibility in providing solutions that help stabilize exchange rates,” al-Kafai said, noting that “integration and cooperation between the private sector and the Central Bank of Iraq are needed.”
She said that “the citizen is required to refrain from buying any commodity in dollars, and here he must go to buy goods from a similar trader who sells in dinars, and thus contributes to reducing the demand for the dollar, as this mechanism leads to the tendency of all traders to deal in dinars, and contributes to the non-rise in prices, as the trader will go to the bank to obtain the dollar at a price of 1320 dinars against the dollar, to cover his imports through the approved mechanism.”
She stressed that “in this way, the two most important elements will abandon dealing in dollars, the citizen who has many and varied transactions, as the country’s population exceeded 40 million people, and merchants, who represent a large segment leading the economy, whose imports represent 95% of the local market’s need, and when transactions go to the dinar, we tend to achieve stability in exchange rates, provided that we refrain from buying any need in dollars.”
She warned that “the importance of the Ministry of Commerce raising the slogan of dealing with the dinar, and to escalate the cases of education through seminars, conferences and the media, to be dealing with the dinar exclusively, in support of the government’s measures to stabilize the exchange rates of the dollar against the dinar and at the official rate, and there can be an active role for the Department of Private Sector Development and the Department of Import and Export in the Ministry of Commerce, from here must launch a campaign to deal with dinars exclusively.”
“It is imperative that ministries and the media join efforts to move towards dealing in dinars and make dealing in dollars between the merchant and the bank exclusively for the purposes of financial imports,” she said, pointing out that “the commercial family realizes that dealing with the official exchange rate rates is more useful and profitable.”
“This mechanism will reduce dealing in the parallel market, which offers the dollar at higher prices than the official rate of 1320,<> dinars to the dollar,” al-Kafaei said.
Silwan al-Nouri, a specialist in economic affairs, stressed “the imperative that we move to deal with local dinars inside the country, adopt mechanisms agreed upon between the private sector, which offers goods and services, and the Central Bank of Iraq, and address all the challenges that prevent traders from going to the banking system to obtain dollars to cover their foreign imports.”
He pointed out that “Iraq has a large volume of transactions with various countries of the world, and there are challenges in dealing that need a serious pause to address them through continuous meetings that bring together the concerned parties, to create a policy of dealing that regulates the reality of the local market, and maintains its stability, and the dinar is for internal transactions, and the dollar for foreign transactions and from its official sources, and not to go to the parallel market to obtain the dollar.”
“Restricting transactions to dinars is an important step that raises the value of the dinar and takes the market to the stage of stability,” he said.
Source: Dinar Recaps
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