Enorrste: The CBI will begin destroying the large notes

by **RamblerNash** Tue Nov 08, 2016 12:26 am

Enorrste

Article: "Learn the benefits of removing zeros from the Iraqi currency " [Guru] Mike, I tend to agree with you that entry into Article VIII is a necessary prerequisite. I doubt any serious investors in dinars would play in the dinar market without some form of level playing field that is offered through Article VIII. The market spread situation can be corrected by floating the currency. An announcement that the currency would be allowed to float would automatically make the official rate and the street rate identical. Furthermore, the plan is clearly stated to reduce the money supply from 50 trillion dinars to 40 billion dinars. They just haven't started the process yet. It is my take that the article ...is saying that this process will begin in early 2017. [reference Guru mike post 11-7-2016]

The CBI will begin destroying the large notes, thus reducing the money supply, and this will put upward pressure on the value of the currency, irrespective of Article VIII. If they also accept the Article VIII conditions, which I believe is the stated goal of the IMF, then the process could move along much faster. Trade would improve in Iraq, thus allowing more money to come into the country, relieving the liquidity crisis somewhat, and this would allow the CBI to begin reducing the money supply. They are clearly on record that they want the money supply to be brought down to 40 billion dinars. They just have to have a mechanism to make this happen without too much of a jolt internally. And, of course, they have to START. I believe the article is saying that they have made a determination that the start will happen in early 2017.