F = FRANK26 | N = NOVA
NOVA - What prompted me to come onto your calls is what the IMF and BIS was doing to affect the revaluation. Nothing I'm speaking about says "tomorrow" but that things are changing and they will be unable to hide it any longer.
For the last 5 months we've witnessed really both of those things: doing things that tell us things will change, none of which means "tomorrow" even though that's not what we want to hear.
In some ways that is what has happened. The other thing is that they can't hide it. One of the things they did yesterday is took a big step in being unable to hide what they're going to do. ....
N - A Central Bank is a "central" bank to banks. Central Bank's job #1 is to control the banking system with banks, not with 3rd party financial institutions, i.e., exchange company. They primarily work with very large banks inside the countries. They, in turn, work with the smaller banks in-country. What the Board of Governors with the CBI did yesterday was important. This is the most important body of people on the banking side of Iraq. They have a lot of power but they don't talk. The last time the Board came out and said something was when they gave Turki permission to do what he's doing (monetary reform). The first thing to understand is this is Turki's boss. He might be appointed by Maliki but he answers to the Board.
N - They announced they would allow 3rd party institutions to do direct business with the CBI's auctions. The only way you can do business with CBI is to participate in the auctions. Right now that's the only way to participate. THey have to do a lot of work to do this. They said this would help with money laundering. The main reason is for a "special situation." They don't typically have "special situations." It's not bonds. It's what we all are waiting to hear. It's not gold. What other "special situation" is the CBI anticipating? The one that will impact every single person in iraq. To control this process they need to allow every bank direct access to the CBI. What does the CBI want? They want the higher denoms back.
N - So what the CBI has done is say "you deal with us directly" for this "special situation." That's it in a nutshell.
Q&A STARTING NOW... C = CALLER | N = NOVA | F = FRANK26 M=MEMPHIS
C - The main words they mentioned in the article you're referring to are "expand special events." Once you see those words you have wonder what are they talking about? Those 3 words are pretty clear is that they will expand something -in my mind that is access and availability. The Board of Governors is doing this, not because they want to, but because they have to. They are expanding with great purpose - for what? Increased access into the banking sector for special events.
N - They're doing it because they want absolute control over the process and don't want people hoarding what they turn in. What would we do? We would hoard and do everything we can not to spend money because we know something is going to happen. Once this rolls over people it will affect every single person in Iraq. Nobody knows what's on the CBI's list, but an action like this by the CBI is done RIGHT AT THE END. They don't have the time or resources, but it's what they HAVE to do. Again, it doesn't speak to tomorrow, but it's another huge step they are doing what is necessary.
NOTE: That previous "C" is actually Memphis.
M - Were we looking for it today? No. I don't think anybody was looking for it. But now we have to give it value and I'm holding on to it.
N - In the USA you can't get a federal charter from the Federal Reserve (Central Bank) to open a bank. The only way to get a federal charter is to purchase a bank that already has a charter. Or go through a 3rd party. The CBI has now said "we'll deal with them all" because of special situations because of what might "pop out of thin air." This is a big deal. When people ask "is this going to happen" this tells me they are going to do this.
FRANK26 - Okay, I'm now going to give our "take" this info and then take questions. Following that we will have an hour of wealth management questions with Nova.
F - Nova, I want to thank you first for sharing. The article he's referring to is on our Forum. We have the CBI, not necessarily stepping on anybody's toes by not following banking rules and regulations, but making exceptions to those rules. The Iraqi dinar is an exceptional currency. The CBI reached out to other banks (non-state banks), exchange offices, simple mom & pop banks, etc. which is not normal. So they now have bridged themselves so people around the world can go to these institutions and take their 3-zero notes. The timing is what is so important.
F - If I now walk into one of these banks or institutions associated with the CBI outside of Iraq, what will they give me? They will give me the currency of my country. They don't use their 3-zero notes because they know something is about to happen. The timing for the schedule for something to happen by June 14 is important. The reason the CBI is doing this is because of a "special event." The only special event they should be involved in is the monetary reform of their currency. They are doing this to get you to come in and exchange your dinars.
N - If the EU, the USA, and other Central Banks of the world had adopted Basel III and I own a bank that took in dinar, what would motivate me to give those higher denoms to Iraq if they're about to have higher values? They have eliminated that from Iraq. What will motivate these banks to turn in those higher denoms?
F - Like Nova was telling you, if we were Iraqi citizens we'd be hoarding because there is a monetary reform coming. The Iraqi citizens are saying "give me the LDs" and we're saying "give me the profits." All these banks and exchange offices will now be able to help with this exchange and will be able to help the CBI with this process of exchanging the 3-zeros into the LDs and coins. This is coming from the CBI. This is the same group that told Turki to increase the value of the currency "as you see fit." Have we not seen Turki take us to where we are at now? They are controlling the market price by doing this as well.
F - It is important they control that market before June 14, 2014. Do you remember that language law? This morning on Iraqi TV they are now saying this language law is going to be implemented now. Talk about timing! The CBI is trying to get these 3-zeros the dealers sold to us back. The CBI wants us all to deposit these 3-zero notes into exchange offices all over the world. These final 3-zero, if they're not collected back, they will co-exist but you won't see them on the streets in Iraq. This is a very, very well done monetary reform. Everybody involved should be applauded and will become a model the IMF will use for other countries.
F - Let me add more excitement to it. I live in Ohio, right next to Michigan. Michigan has the largest population of Iraqis outside of Iraq. And the CBI knows this. The Al-Taifi Money Transfer Exchange Company (you'll see this on the CBI website) is in Michigan and is licensed by the CBI. The CBI was told to liberalize the exchangers. This is one example. These financial companies that are basically exchange offices - there are 33 of them licensed by the CBI. Al-Taifi is just one of the 33 money transfer exchange companies that represents the CBI around the world. The CBI is taking control not only of the currency but of the exchange process as well.
F - These 33 exchange offices are licensed by the CBI. This is a 100% guarantee all systems will work when the rates change. So, there it is. This is about as exciting as it gets. Let's give recognition to Nova and Memphis.
END OF INTEL PORTION OF CALL. Q&A WILL NOT BE TRANSCRIBED.