Why won’t international banks accept the Iraqi Dinar?

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1-8-13 SWFloridaGuy: I’ve received several rebuttals to the information I presented. They’re all very similar and claim that “The IQD is already Interbank listed on the Thai Interbank. This market is an important segment of the foreign exchange market. It is already being traded. It doesn’t matter that it’s not traded on the Forex and that I was being misleading in my interpretation.”

This whole issue is not something I wish to rehash but this was at least a well-thought-out response. I’ll expound a bit more but I’d rather accentuate Iraq’s sumptuous economic growth (ranked 1 or 2 in the world; sources vary), and aspects relating to their emergence on the international scene that are encouraging and probably more deserving of our attention.

So, we all agree now that the IQD is not traded on Forex and now the theory is it would be a seamless transition where it could show up on Forex first because it is already being traded on an important foreign exchange market. Well, I would like to see the trades/volume they are referring to and then have it explained to me how that relates to the fact that the IQD is not internationally recognized, convertible, available to trade on any Forex market and why international banks will not accept the Iraqi Dinar.

If we’re going to focus on the Thai Interbank the first thing we have to understand is that for an Interbank market to exist, a competitive banking system and an efficient payment and settlement system linking banks together is required. Iraq has neither. The Interbank market in Iraq does not resemble other economies. Foreign exchange markets are another institution that is primitive in Iraq. Foreign exchange trades against the dinar are not managed electronically through an investment bank market maker.

Now all that can change very quickly. In part, because Iraq is receiving a lot of international pressure that supports nation building. The international community seeks to fully exploit Iraq’s wealth and this will require (among other things) a sound currency. Iraq’s currency board once produced a sound and stable dinar anchored to the British pound and I believe there may be another board preparing to make the IQD a fully convertible currency that they can maintain. If this board is similar to others past, the directors will be appointed by the BIS (represented by 7+ countries) and the GOI.

The IQD not being a convertible currency is a severe hindrance to conducting business internationally. I have risked much of my own capital in hopes of a large profit and, after all we’ve been through, I am still confident that as a community we will accomplish far more than just adding liquidity to the market. There were several reports from the CBI last year that pointed to early 2013 as target date for currency reform. How long this will take is anyone’s guess but I think we can all agree that economically Iraq is headed in the right direction.

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