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by PGLD Fri Apr 13, 2012 11:58 am

Thu Apr 12, 2012 3:10pm EDT

* Cabinet says stops plans to redenominate dinar "untilfurther notice"

* Iraq has over 30 trillion Iraqi dinars in circulation

* Plan to trim zeros not seen as a priority

By Aseel Kami

BAGHDAD,
April 12 (Reuters) - Iraq has decided to hold offon a plan to knock
three zeros off the nominal value of banknotes of its currency because
it does not believe the economicclimate is suitable, the cabinet
secretary said on Thursday.

The central bank said last August it
planned to redenominatethe Iraqi dinar to simplify financial
transactions in an economythat is still heavily centralised and
dominated by oil, andwhere deals are often carried out in cash.

The
proposal to restructure the dinar to bring moreliquidity into the
market has been awaiting parliamentaryapproval since last year.

On
Thursday, a statement on the website of the cabinetsecretary said the
cabinet had decided to halt all proceduresrelating to the redenomination
of the dinar "until furthernotice".

"The economic committee
discussed this issue and so didcabinet ... There is a possibility that
it could cause someproblems in the economic situation. Besides that,
this operationis so big that cabinet sees circumstances are not right
tocontrol this," cabinet secretary Ali al-Alaq told Reuters.

Iraq
is slowly getting back on its feet after years of warand sanctions. Oil
accounts for 95 percent of governmentrevenues and the country's banking
system is still highlyunderdeveloped.

HUGE PROCESS

The
central bank has kept the dinar fixed at 1,170 dinars tothe dollar in
its daily auction but it recently moved to revaluethe dinar slightly to
1,166 dinars after demand for the U.S.currency soared.

The
central bank said it also had to tighten regulations over who can
participate in the auctions as Iraqi traders sought to snap up dollars
for resale in neighbouring Syria and Iran, both under Western economic
sanctions.

Sales of dollars in currency auctions held by Iraq's
centralbank rose as high as $400 million on some days in December froma
previous average of $150 million, according to central bankdata.

"We
have more than 30 trillion dinars in circulation. Towithdraw this
amount from the market and then to examine themand to dispose of them is
a huge process. Even the technical andthe monetary capabilities to
control a process like this, weconsider as insufficient and it is not
seen as a prioritycurrently," Alaq said.

The central bank says
Iraq's large foreign reserves, whichhave risen to a record $60 billion
on the back of high oilprices, will shield it from any damage to its
financial systemon the national level.

http://www.reuters.com/article/2012/04/12/iraq-currency-idUSL3E8FC8G120120412

by 1alaskan Fri Apr 13, 2012 1:43 pm

That is the Maliki's cabinet, What say the CBI and Parliment?

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