Economie| 09:24 – 22/05/2021
Baghdad – Mawazine News
The Prime Minister’s Adviser for Financial Affairs, Mazhar Muhammad Salih, outlined today, Saturday, the tasks of banks in investing the funds deposited with them, while warning of the dangers of raising the cash issue at the expense of financing and increasing the quantities of Iraqi currency in the market.
Saleh said, “The quantitative theory in economics confirms the existence of a direct relationship between the quantity of money and prices, and thus the more money the price increases, so the income is assumed to be stable,” warning of “the risks of raising the cash issue at the expense of financing, because it will lead to inflation.” .
He added, “The cash quantity must be proportional to income,” noting that “there is a stagnation in the monetary cycle.”
With regard to the functions of the banks, he explained, “The banks’ job is to transfer money from surplus units represented by the entities and people who have money but lack the willingness to invest it and resort to depositing their money with them, to the deficit units represented by people who are willing to invest and rebuild but do not have sufficient funds, and want to borrow because of their desire in Building and Reconstruction. ”
He stressed, “Banks are responsible for the process of recycling the flowing liquidity resulting from production, to prevent disrupting investment by not spending money on investments,” stressing “the need to properly rotate funds and ensure the availability of consumer and investment spending to prevent a financial recession.”
He pointed out that “the income cycle requires that money that is not consumed go to savings, and then the saved money is transferred to consumption so that the cycle is completed in its correct form,” indicating that “
He stated, “The basis of funds is economic activity, while funds that come without economic activity are considered inflationary money, such as printing currency and so on,” noting that “saved funds that are not spent on investments will lead to disruption of investment.” Ended 29 / A 87