This is how Yugoslavia announced that their dinar would be convertible. Could it be similar to how Iraq will announce it?
Quote:Belgrade, March 11, 2002 - Yugoslavia will soon have a new law on foreign currency exchange that will liberalize the area and enable the dinar to become convertible, seen as another clear signal to foreign investors that investing in the country is now safe and stable.
Under a new law that should be submitted to the parliament for adoption by the end of March or early April at the latest, banks will be able to buy unlimited amounts of hard currencies regardless of the purpose, and will also enable firms to pay for exports in advance and citizens to transfer significant amounts of money abroad - all of which is not possible under current regulations.
Quote:An IMF mission scheduled to visit Belgrade in March will analyze the economic indicators and new legal regulations in the foreign exchange sector. The National Bank expects an announcement of the dinar's convertibility will be made immediately following the visit.
Quote:"The exchange rate will be determined exclusively through supply and demand of hard currencies and we surely won't be spending hard currency reserves to maintain an unreal exchange rate," Dinkic said. "However, I don't expect that we will have any problems at all because the supply of hard currencies is still going to be higher than demand."
I realize that Iraq isn't Yugoslavia, but I would imagine that there is a protocol to be followed for these kinds of things. If so, I think this article gives us clues to look for.
(Great find Hollywood)
"I can do all things through Christ which strengtheneth me." - Philippians 4:13
Quote:At a strategy session at the bank's headquarters in Washington, D.C., officials urged the Central Asian nation to focus on making its currency convertible and improving conditions for trade.
Quote:David Pearce is the World Bank's country manager for Uzbekistan.
Quote:Of the five areas of reform, the most important, Pearce says, concerns the liberalization of the country's foreign exchange and trade regimes.
Transforming the Uzbek "som" into a convertible currency, he adds, is a declared objective of the Tashkent government as well as a feature of the country's agreement in January with the International Monetary Fund (IMF) on economic and financial policies.
Pearce says the Uzbek government is aiming to achieve account convertibility -- in other words, allowing banks, business, and private individuals to exchange foreign currency -- by the middle of 2002.
Quote:At an annual cabinet review in February, Uzbek President Islam Karimov said major steps toward convertibility had been taken in 2001 and suggested the goal would be achieved this year. But Pearce says it is difficult to say when the convertibility process may actually be completed.
Quote:
Pearce says the changes recommended in the Tashkent-IMF memorandum will have some negative effects in the short term, but positive consequences in the medium and long term: "I mean, there is a mix of positive and negative influences of these reforms, these changes, which will need to be estimated quite carefully. That indeed would be the objective of IMF, World Bank, and other cooperation with the [Uzbek] government."
One such short-term negative consequence, Pearce says, is the risk of a currency devaluation, which would force businesses with foreign debts to get more soms. Pearce says the Uzbek banking system will need to have a strategy in place to avoid this potentially destabilizing situation.
Furthermore, the switch to a convertible currency could trigger an increase in inflation, a situation that will hit especially hard those -- like civil servants and pensioners -- living on fixed incomes. As a result, Pearce says, temporary measures must be taken to finance social welfare programs to help those sectors of the population affected by the switch.
Pearce says Tashkent's agreement with the IMF provides the proper framework for progress on the convertibility issue. But he says the World Bank, in determining which loan scenario to endorse, will be looking for additional reforms in areas of what he calls the "real economy" -- agriculture and finance, privatization, and public utilities.
Quote:"An IMF program is indeed an important element -- or condition, if you like -- for enhanced or expanded World Bank rapport. But it's not itself sufficient. There needs to be, in our view, improved reforms in these other areas," Pearce says.
Quote:Pearce says the modest parameters of the World Bank's assistance strategy do not reflect Uzbekistan's relative importance in the region but says more sweeping assistance will not be offered until certain reform achievements have been made -- most notably, a convertible currency.
Again, Iraq isn't Uzbekistan, but I'm beginning to see a trend. There was no secrecy about these countries making their currencies convertible. The IMF and World Bank came out ahead of time and said it needed to be done.
"I can do all things through Christ which strengtheneth me." - Philippians 4:13
Re: How Yugoslavia Announced It
I haven't begun researching this yet, but this was passed on in chat...
Yugoslavia:
EPCA approved 12/2000 through March 2001
10 month SBA approved on 6/2001
Convertible Currency - 3/2002
I will post back when I've looked into it more. I will let you know what I come up with.
I think we should be more focused on the process that these countries have taken to make their currencies convertible, that way we'll have a better idea of what to look for.
"I can do all things through Christ which strengtheneth me." - Philippians 4:13
Quote:Uzbekistan's economy is still in the transition period and moving to a market economy. The government has been undertaking economic reforms and trying to move slower but without major shocks to general population. However, at the beginning it resulted in painless transition to market economy with less harm but eventually resulted in the stagnation of reforms. Government is undertaking steps to develop its economy where government plays major role. The Uzbek government is trying to work with International Monetary Fund to achieve a full convertibility of local currency and move forward on economic reforms.
Quote:On October 15, [2004] the Uzbek sum became convertible for current international operations. Shukhrat Tashmuradov of the Central Bank explains that current international operations refer to export-import payments, buying and selling of hard currency values, interest transfers, dividend and other incomes in bank accounts, credits, investment and other financial operations. They also includes non-trade transfers (for study, medical costs, insurance, wages, inheritance and others). Now there are no restrictions on foreign economic activity for residents and nonresidents involving conversion of currency.
Quote:The recent IMF mission here approved the positive results of fulfilling the conditions for this.
Again, we see that an IMF mission approved it. Maybe we need to keep our eyes open for an IMF mission to Iraq focused on convertibility of the dinar. I'm beginning to think that it won't be such a big secret. The goal of currency convertibility was announced over a year ahead of time.
Quote:Uzbekistan relied on other countries’ experience in its conversion policy. Gold reserves were increased. A new law “On currency regulation” was worked out. It will comply with IMF agreement article 8.
Now that macroeconomic stability has been achieved, further liberalization of economic activity is possible, including attracting foreign investors. Possibilities to realize wide-scale market structural changes in privatization, capital construction, agriculture, energy and other sectors open up with conversion. The reduction of state employment in the economy will increase. Uzbekistan’s integration into the world economy is accelerated.
"relied on other countries' experience" = followed protocol?
"I can do all things through Christ which strengtheneth me." - Philippians 4:13
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