The new 20 thousand dinars category raises controversy and reveals the hidden.. Economists: It will increase inflation
The new 20 thousand dinars category raises controversy and reveals the hidden.. Economists: It will increase inflation
10-11 2022 08:37
Shafaq News/ The announcement by the Central Bank of Iraq of its intention to issue a new cash denomination worth 20 thousand dinars (equivalent to about 13 dollars), sparked some responses and opinions in some economic and popular circles, about the feasibility of issuing this cash category and its repercussions on the economic reality of the country.
On the ninth of this October, the Parliamentary Finance Committee discussed with the Governor of the Central Bank the feasibility and motives behind the decision of the Central Bank to offer a category of 20 thousand dinars, the financial value of this category and other details related to its upcoming issuance.
Government: improve and facilitate
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, said in an interview with Shafaq News Agency; “The Central Bank monitors the efficiency of the cash payments system for stability, and therefore it sees where the compensation and demand are, and it is part of its business,” noting that “issuing such a currency increases the efficiency of the payments system.”
He added that “the new currency is an intermediate currency and will help in improving and facilitating the efficiency of the payment system, counting, sorting and size.”
Saleh denied that “issuing the new currency will lead to a state of inflation,” stressing that “issuing this currency will be an alternative to issuing other currencies of 50 or 25 thousand dinars that exist and will be within the meal and not outside it, in addition to that it is a not large category to cause inflation.” .
He stressed that “the issue is regulatory and reasonable, and it is part of the supervision of the issuance department of the Central Bank, which monitors the efficiency in the cash payments system and is trying to raise and improve it.”
No economic feasibility
The economist and professor of economics at the Iraqi University, Abdul Rahman Al-Mashhadani, said in an interview with Shafaq News Agency; “There is no economic feasibility in issuing a new currency of the 20 thousand dinars category because there is no crisis in paper currencies at the present time, and the category is not a necessary category so that it is less than 250 dinars or higher than 50 thousand dinars to reduce the cash mass between banks and for citizens.”
Al-Mashhadani points out that “the central bank has to change all the existing categories because a long time has passed since their issuance, and therefore they have been subjected to forgery, and that most countries resort to changing their currency and making more water security additions.”
Al-Mashhadani stressed that “the entry of the new category to the market without canceling other categories will lead to higher prices and inflation will rise,” noting that “there are 83 trillion dinars circulating in the market, and therefore the new category will lead to a rise in this bloc, which may reach 100 trillion dinars.”
He explained that “inflation has actually risen from 8 percent to 12 percent now, and the issuance of this category may reach 18 percent with inflation.”
Criticism is the culture of the Iraqi citizen
The economic expert, Basem Jamil Antoine, said in an interview with Shafak News Agency; The “Iraqi banking system, whether it was the central bank and private and governmental banks, could not accustom the citizen to reduce dependence on cash and bring down alternatives from Visa Card, K-Card and others.”
Antoine added that “there is a general culture and conviction of the Iraqi in criticism more than his conviction in the modern methods used globally.”
He pointed out that “three-quarters of the cash is stored in the homes and is not used permanently. Therefore, the bank put forward the idea of this new category to keep things moving.”
Central Bank: No negative effects
for his part; The bank announced in press statements that “the new denomination of 20 thousand dinars will have the best and latest technologies for security marking of banknotes, indicating that it seeks through the issuance of this category to develop the national currency chains and provide them with high security characteristics, and it does not involve any disadvantages as it will not affect negatively. on the money supply or on the value of its notes and other denominations.
He added that “the size of the new category will be close to the size of the 50 thousand dinars category, which is the standard size of banknotes globally, stressing that no old cash denominations will be withdrawn, and the new 20 thousand paper will be added to the rest of the categories, with the aim of improving and enriching cash circulation.”
Citizens: new corruption
While a number of citizens considered the bank’s endeavor to issue a new denomination of the 20 thousand dinars currency as a gateway to new corruption.
Abdul Hadi Muhammad said in an interview with Shafaq News Agency; “The process of issuing a new category needs billions of dollars and is a gateway to new corruption,” stressing that “Iraq does not need a new category of currency, but rather needs treatments and methods to develop the economic sector and eliminate unemployment.”
He continues that most private banks do not practice their credit work as it is in other countries, but are limited to entering into the currency auction conducted by the Central Bank and thus lose their basic function.
from his side; Citizen Muhammad Razzaq considered in an interview with Shafaq News that “the problem is not in the lack of cash groups, but in the lack of work in the private sector,” calling on “the bank to support more industrial projects and follow up on the money spent by these projects.”
He pointed out that “issuing such a new currency will inevitably lead to an increase in prices, and its harm will be reflected on the simple citizen.”
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