Category new cash it will be a blessing or a curse?

Raed al-Hashemi

Monday November 23.2015

Step taken by the Iraqi government cash currency printing of fifty-class thousand dinars Is it the right move will help address the dire economic situation of the country?

To answer this question we must clarify that there are two cases to as the third for them when cash currency printed a new category, whether big or a small, first, a sound that the Government printed new category without an increase in asking allocated from the money supply in circulation in the market monthly amount of any maintaining the size of the case (the original amount of the money supply) without an increase, but the change in the types of categories in which case the procedure is of sound To Aakhalq any inflation, but will achieve steps in the monetary reform process and supports the economy because the deal in the Iraqi market basis based on money supply offset by a small percentage rely on instruments and cards and electronic payment, and will be considered this procedure is not intrusive monetary policy of the country, but is considered part of the payments system management, and here will contribute This procedure is in increasing demand for the national currency and thus increasing value for foreign currency and as a result will reduce the impact of the economic crisis in the Iraqi economy.

The second case was when the government printing of the new category of currency and do pumped into the market of new as payments added to the size of (the original amount of the money supply in circulation) Here, the action is wrong and has negative effects on the economy in all respects because it means that the central bank will lend to the government to promote the shortfall in the budget and therefore will raise the inflation in prices and create stagflation or the so-called (funded budget to inflation), and this would convey the bankruptcy of the state to the community, plus it will create a great disparity between social groups where will be layers of the rich and the layers of the downtrodden, This option is considered bad in all respects because it will contribute to the creation of future economic movement it adds significant accumulations on the economy, including the deterioration of the dinar exchange rate against the dollar and create ill-high distribution of cash currency in the market and all of these factors may result in the arrival of the Iraqi economy into the most dangerous types of inflation known as wildly inflationary and that It has significant negative effects on all aspects of the economy and will increase the economic crisis rather than solve them, not to mention opening the door to fraud that you find in this large cash category lure them to carry out fraud and pumping amounts forged to the Iraqi market factor in light of the deteriorating security conditions for the country As a result the big concern in the war against terrorism and in light of the rampant corruption in all state institutions, including the security in particular.

We raised in the foregoing negative and positive sides to the process of monetary currency of a large class printed in light of economic theory known worldwide and remains the answer to our inquiries the first vague because the ball in the court of the Iraqi government and we do not know the Mavi intention of made the decision Is it relied on the first case of sound, which will lead to reduce the impact of economic and financial crisis we are going through or that he relied on the negative and the second case, which will increase from insult to injury and will put the Iraqi economy, bad, and this we Maostagibh the coming months, which will develop the answer to our inquiries which have been waiting impatiently.