Interview with CBI’s Shabibi: Dropping zeros; Iraq’s reserves $60 billion

Detection of the Iraqi Central Bank Governor Dr Sinan Shabibi, in a dialogue with the «weekly» that the restructuring of the national currency, starting with the deletion of zeros from the dinar, a very important step, because they relate to the direct purchasing power and inflation. The Shabibi that the central bank independent, which is directly responsible for monetary policy, exchange rates and foreign reserves management and the organization of the banking sector. The details of the interview:

Question: Iraqi Council of Ministers decision, addressed to the Iraqi Central Bank monetary policy adopted to refer to the government for approval and approval, the banking sector has raised concerns the likelihood of government intervention in its affairs. What is your comment on this?

Answer: There is no doubt that monetary policy linked to the central bank that is being questioned by the House of Representatives, and the independence of the central bank does not mean that his attitude from the government which can not afford an explanation of a negative in terms of dealing with the many important issues, and I think that this independence is in favor of the government because it grants the Iraqi Central a great opportunity for the adoption of policies that deal with inflation, and if these policies will be constrained to the negative impact on the state enterprises. I also think that the principle upon which the independence of the CBI is that the authority responsible for printing money is supposed to be independent of the other parties, which holds the spending on state enterprises, by which I mean the executive branch, otherwise it would be able to last and when they need to cash, to resort to Central printing, which leads to increase the amount of inflation or printed. So I see the need for the independence of the central, and this independence of the Central grant the possibility of stabilizing policies, but it certainly requires coordination with the government.

Question: Is there nothing to suggest a link between Iraq’s central and executive power in the constitution?

Answer: The Constitution confirms that the CBI is responsible to the House of Representatives in the implementation of its monetary policy, and the close relationship between the CBI and the House of Representatives are in favor of the executive branch that need economic stability, who works for it’s central. And economic stability is the stability of the currency and prices and inflation, and on this occasion to talk about the need to develop a strategy for the management of fiscal and monetary policies as it provides the opportunity to promote the economic performance better without restrictions shackle workers in these vital sectors and prevent their movement.

Delete the zeros

Question: the project to delete the zeros of the local currency is seen how the «Iraqi Central» and its importance?

Answer: At the outset say that the project to delete the zeros of the new Iraqi dinar, which is expected to see the light at the first of January of next year, is one of the strategic functions of the central, because of its importance in alleviating the lot of suffering faced by economic sectors and wide, in front of the budget and commodity trading day. On this occasion, say that the zeros have been added to Iraqi currency in the early eighties formed a cluster of large cash amounted to 28.5 trillion Iraqi dinars, or nearly five trillion paper money, so it was the Iraqi central line in his new project with its monetary policy based on restructuring and reducing the size of the currency, especially since Iraq is moving towards a market economy stage. As has been initialized supplies required to replace the Iraqi currency and took the Iraqi central accounting measures in order to stabilize the dinar exchange rate so that is expected to facilitate the new dinar cash transactions affected by variation in the currency difference.

Question: What are the expected reactions to this move?

Answer: Draft new dinar there, and the Iraqi central monetary authority which is responsible to delete the zeros project is an essential step because this deletion represents a restructuring of the national currency and the initiation of a new currency system.

Question: Does the international donor (IMF) institutions support this move?

Answer: Yes, that institutions support the restructuring of the currency to facilitate the deal.

Question: On the other hand we ask about the importance of cash reserves in relation to Iraq, which tends to strengthen its currency?

Answer: For the first time in the history of Iraq, rising foreign exchange reserves of foreign currency to the $ 60 billion and is no doubt that the increase in reserves of the CBI that enhances confidence in local currency, and increases the stability, which helped the CBI to take important steps was the most prominent of trade finance for the sector own and maintain the stability of the market and curb inflation. On this occasion I would say that inflation is no longer a concern for us and it is under control and within the policy of price stability. Hence we can say that the cash reserve forces of the hard currency makes us able to curb inflation quickly, and the Central Bank of Iraq was constantly keen to work towards the reduction of inflation through fiscal policy challenge of rising prices, which confuses the family income and a negative impact on price stability in the country .

Question: Experts emphasize the poor performance of Iraqi banks what are your steps to address this imbalance?

Answer: CBI always continually support the Iraqi banks, consider this a priority of his policy, which aspires to take the banking sector role in development and reconstruction, and the advancement of the country’s economy, and I think that the decision to raise the capital of private banks to 250 billion dinars in 2013 would help to promote an important role for the sector expands from the Department of banking services, and we are studying proposals that will help to allow banks to expand its circle of activity, in addition to its traditional, so willing to give loans long term, because of their significant impact on the development of investment activity and project implementation strategy.

Question: Are there specific steps to seek to achieve in this area?

Answer: I think there is now a need to develop the banking culture, and to the wider use of modern systems that facilitate the trading process and transactions between banks and their affiliates, as well as with foreign banks, and we will work to improve this aspect widely.

Question: What is the importance of the Iraqi Central decision pending patent application for the tax levels of foreign remittances to 50 thousand dollars for the expansion of banking activity?

Answer: The decision falls within the framework of personal remittances and in conformity with the tax reform so that it meets the ambition of the market and private banks as part of the market. I believe that this decision will be encouraged to hold a large commercial transactions for companies, especially since the purpose of settling accounts in tax money is not a conversion adapter but on the profits, and the implications of decision-useful to balance the market and sales. On this occasion, I call for a review of some of the tax laws that can create some sort of reassurance to those concerned Balthacb tax.

Question: plague the economic and financial circles, sometimes due to fears of price fluctuations of the Iraqi Central sales of the dollar?

Answer: The strength of the Iraqi dinar strengthened the size of reserves of the Central Bank of foreign exchange of 60 billion dollars, this makes the Iraqi dinar and one of the strongest currencies in the region, so I do not see a positive to any fears of rising inflation due to falling sales of the central of the dollar, so that the bank has the possibility of being able to install large financial stability, and has more measures to increase stability in the rates of prices in foreign currency savings.