The Arab Accounting Dinar: A Strategic Tool For Arab Economic Integration
October 30, 2024 Last updated: October 30, 2024
Hussein Al-Falluji* In light of the growing economic challenges facing Arab countries, the role of the Arab Accounting Dinar is emerging as an important strategic tool that may contribute to enhancing economic integration and providing effective solutions to common Arab problems.
Perhaps many followers of Arab affairs are unaware of the existence of the Arab Accounting Dinar, this important economic tool that can play a vital role in promoting economic integration and providing effective solutions to common problems among Arab countries.
Some people wonder about the reasons for not activating this vital project optimally, despite the great opportunities it provides for achieving financial stability and economic prosperity.
The Arab Monetary Fund relies on the Arab Accounting Dinar as the official base currency, which differs from the currencies circulating in Arab and international markets.
The arithmetic exchange rate of the Arab dinar was fixed at the equivalent of three units of Special Drawing Rights specified by the International Monetary Fund.
Special Drawing Rights are an international reserve asset created by the International Monetary Fund in 1969 to supplement the official reserves of member states.
The value of these rights is determined based on a basket of five major international currencies: the Chinese yuan, the US dollar, the European euro, the Japanese yen, and the British pound.
This link to a basket of strong currencies gives the Arab Accounting Dinar relative stability and reduces the risk of global exchange rate fluctuations, enhancing confidence in it as an instrument of financial exchange.
The use of the Arab Accounting Dinar can contribute to facilitating commercial and financial operations between Arab countries, as
it provides a common monetary unit for settling transactions, which may reduce currency conversion costs and increase the efficiency of financial systems.
This unification helps promote intra-regional trade, opens new horizons for economic cooperation, and stimulates growth by expanding markets and facilitating the movement of goods and services.
In addition, the Arab Accounting Dinar represents a step towards greater financial independence for Arab countries.
By reducing dependence on foreign currencies, Arab countries can better control their monetary policies and mitigate the negative effects of global economic fluctuations.
This enhances the ability to plan financial and investment with greater confidence, supporting sustainable development and investment in vital projects and infrastructure.
The widespread use of the Arab Accounting Dinar may also open new opportunities for joint investment among Arab countries.
It facilitates the financing of major regional projects and enhances cooperation between Arab financial institutions.
By providing a stable and unified financial environment, Arab countries can coordinate their financial and investment policies, which enhances the competitiveness of Arab economies at the international level.
Moreover, the Arab Accounting Dinar reflects a collective commitment by Arab countries to achieving integration and unity.
It is not just an economic tool, but a symbol of cooperation and solidarity in facing common challenges.
This commitment strengthens confidence among member states and paves the way for further cooperation in other areas such as education, health and culture.
Although there may be challenges to promoting the use of the ABD, such as the need to modernize financial infrastructure and coordinate monetary policy, the potential benefits make it an essential investment for the future.
Political will and joint cooperation are the basis for achieving success in this endeavor and overcoming obstacles to achieve the desired economic integration.
In conclusion: Activating and adopting the Arab Accounting Dinar represents a real opportunity for Arab countries to enhance economic integration and achieve common prosperity.
By expanding the use of this unit of account and activating the proposals supporting it, Arab countries can build a more stable and prosperous future for their people, based on economic cooperation, solidarity and unity.
* Independent politician
https://www.xe.com/currencyconverter/convert/?Amount=1&From=XDR&To=USD
1.00 IMF Special Drawing Rights = 1.3302209 US Dollars
1 USD = 0.751755 XDR
https://mustaqila.com/الدينار-العربي-الحسابي/
The Unfair Decision Of The Central Bank Of Iraq To Reduce Interest Rates For Banks And Issue Securities
Shawan Zangana 2024-10-30 – The Central Bank of Iraq decided, Thursday 10/24/2024, to reduce the annual interest rate between it and the banks registered with it from 7.5% to 5.5%, and to reactivate the work with securities (Islamic certificate of deposit and cash transfers) between it and the banks operating in Iraq, with an annual return of 4% for 14 days, and an annual return of 5.5% for 182 days.
Note that the maximum investment ceiling was set not to exceed 50% of the total private sector deposits with the bank, and that the bank’s investment ceiling in one auction should not exceed (500) billion Iraqi dinars.
What does this decision mean?
The following is understood from this decision:
1- The Central Bank reduced the interest rate on lending to banks operating in Iraq by 2%, and attributed this to its desire to stimulate local investment, direct liquidity towards alternative investments, develop the national economy, and create stability.
The Central Bank deliberately forgot to point out that this reduction in the interest rate is for the benefit of the banks, and not for the benefit of companies and individuals, as the banks do not, based on the Central Bank reducing the interest rate in their favor, reduce the interest rates on lending to companies and individuals by the same percentage, so that This support includes them, and liquidity is transferred to development and investment destinations.
Therefore, it clearly appears that the goal of the central bank is to provide liquidity to some banks, and not to citizens, so that these banks can lend to the influential class around them and smuggle currencies abroad.
This procedure will provide banks and financial institutions working with the Central Bank of Iraq with great liquidity to practice interest trade (carry trade), as
these banks will be able to employ the funds borrowed from the Central Bank, at a low interest rate, by depositing them with international financial institutions, in exchange for annual returns, and at high interest rates. (For example, Turkish banks pay annual interest of up to 50% on deposits), and
thus, these banks will reap huge profits, and with the money of the Iraqi people stored in the Central Bank, Without using their own financial assets, these banks will also seek to employ the funds borrowed from the central bank in speculation in global markets and stock exchanges, with the aim of reaping quick and abundant profits.
This investment of central bank funds by banks will inevitably harm the Iraqi economy, which suffers from structural dysfunction and chronic fragility, not to mention that this investment of money is forbidden by Sharia, which is, at the same time, a door to usury, not because of interest, but because of trafficking. With it.
2- The Central Bank has issued securities, in the form of Islamic certificates of deposit and cash transfers, with fixed and specified returns and terms, and attributed this to its endeavor to provide a window for banks under US Treasury sanctions, which are unable to deal in dollars, and have large cash liquidity in Iraqi dinars.
To invest the surplus local cash it has with the Central Bank, through its possession of Islamic certificates of deposit and cash transfers, in order to reap lucrative financial returns, while
it was necessary to The Central Bank is to punish these banks for their legal and ethical violations, and not reward them with financial returns from public funds and from citizens’ rights.
3- Government borrowing through the issuance of sovereign bonds is considered one of the central bank’s monetary policy tools, but at the same time it indicates that the Ministry of Finance is suffering from a shortage of cash liquidity in the local currency, and this leads us to the following question:
Why is the Ministry of Finance suffering from A shortage in the monetary supply in the local currency, despite the cash issuance that exceeded 100 trillion Iraqi dinars?
The answer may be that there is a large monetary mass in the local currency outside the banking system, and that a portion of it is circulated at home and abroad for the purposes of financing smuggling operations.
Implications Of This Decision
This decision will have the following effects:
1- The decision will lead to an increase in the exchange rate of the dinar towards the dollar and other currencies, but temporarily, as the demand for the Iraqi dinar will increase, and
this will cause an increase in its exchange rate, but it will soon move towards a decline towards the dollar, as a result of operations to exchange it for the dollar, for the purposes of smuggling or employment. External cash.
2- This decision will provide large liquidity to banks and financial institutions, which will be exploited to carry out financial transactions outside the development process, with the aim of reaping huge and quick profits.
The Iraqi economy will be exposed to serious damage, as a result of wasting its money and using it by an influential faction to achieve its own interests at the expense of the people, in When the central bank was supposed to reduce the interest rate, on the condition of implementing development projects, and allowing banks to borrow from it, within the scope of the files that individuals and companies submit to local banks, in order to prevent these banks from exploiting these funds for their own interests, outside the development process.
3- This decision, in this form, is a waste of public money, a violation of the rights of citizens, and an economic crime, punishable by law. The Central Bank of Iraq should avoid such decisions, which are economically harmful and forbidden by Sharia.
4- This decision, and similar decisions taken by the Central Bank, have caused, and are causing, the deepening of the imbalance and fragility in the Iraqi economy and its monetary policy, and the prolongation of monetary fluctuation and instability.
Conclusion
It appears that the decision to reduce the interest rate was taken and designed in accordance with what the interests of the ruling class over money in Iraq require, and not in accordance with the interests of national development and the future of the rentier Iraqi economy, which needs financing to diversify its sources of income.
It also appears that the securities are designed to achieve the interests of the sanctioned banks. By the US Treasury, while it was supposed to punish her and cancel her vacations, instead of rewarding her by providing her with lucrative profits from the central bank.
I warn the Central Bank of Iraq against making decisions that harm the currency and deepen its wounds, and
I call on it to conduct an orthodox policy that is consistent with the principles of economics and monetary policy, and to avoid formulating policies or making decisions that contribute to achieving the interests of powerful fragmentation in the country and abroad. https://shafaq.com/ar/مقـالات/قرار-البنك-المركزي-العراقي-الجا-ر-بخفض-سعر-الفا-دة-للمصارف-و-صدار-ال-وراق-المالية
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