BebsiBolice
Suicidal men adore me.
Most Somali cities are dollarized and we have no whatsoever knowledge of the inflation of the shilling. Wouldn't it be better to scrap shilling and create a completely new currency? @velli @Realwarya explain
Economist explain! Should Somalia scrap Shilling and create new currency?
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Yeah the shilling continually plumetting against the dollar is such a big issue. Normally to raise the value of its currency the central bank would create artificial high demand and buy those currencies with foreign currencies (in effect making the shilling more expensive thus raising its value) I wonder why the Central Bank isnt just flooding the market with dollars?
The other way of course is to increase exports to force foreign importers to buy the shilling- This leads to the somali currency being more demanded and therefore again raises its value).
BebsiBolice
Suicidal men adore me.
So should they do that or just scarp it and create a new one?
Not sure. I dont think there is precedent of a country just abandoning and changing its currencies before. I mean what would that look like? How do you re-compensate all the shillings in circulation? And to what amount? If it was kept then a couple things need to happen- For Gods sake stop printing it and increase exports (with all the ports we have should be easy).
Economics 101- The most valuable things are the most scarce things.
The dollarisation is one of the main reasons for the high inflation of the Somali shilling because you can't influence, as outsider, the monetary policy of the dollar. The mobile payment in Somali regions is only done with dollar.
1 dollar=21.000 Somali shilling. What they can do is to revalue the shillings. Turkey did that under Erdogan ten years ago and they removed five or six zero's from their currency by introducing coins cents
Instead of listening to what they tell you, do what they do. US and EU print money on regular basis, they just are ambiguous about the amount and the timing. EU does it on the regular
http://www.reuters.com/article/us-ecb-policy-idUSKBN0M10UX20150305
Devaluation of the currency is actually really good for the export. China devalues its currency on purpose. Another case of 'don't do what they say, but do what they do' is when IMF told South-East Asian countries in the 1997 crisis to not devalue their currency but rather have a fixed exchanged rate. Only Malaysia's Mahathir told them to fock off and devalued his exchange rate. Malaysia survived the crisis, Thailand and Indonesia were hit hard when they applied what IMF told them.
Instead of listening to what they tell you, do what they do. US and EU print money on regular basis, they just are ambiguous about the amount and the timing. EU does it on the regular
http://www.reuters.com/article/us-ecb-policy-idUSKBN0M10UX20150305
Devaluation of the currency is actually really good for the export. China devalues its currency on purpose. Another case of 'don't do what they say, but do what they do' is when IMF told South-East Asian countries in the 1997 crisis to not devalue their currency but rather have a fixed exchanged rate. Only Malaysia's Mahathir told them to fock off and devalued his exchange rate. Malaysia survived the crisis, Thailand and Indonesia were hit hard when they applied what IMF told them.
BebsiBolice
Suicidal men adore me.
yeah IMF has no credibility only spreads western ideologies on everyone else. I can't believe Somalia's gov takes orders from Washington and IMF to institutions that exists only to continue colonialism.
Lol you don't think the shilling is devalued enough lmao it's near worthless ffs. Just because they are in a situation to do something doesn't mean Somalia is.
I was talking in general. Somalia is beyond exception. SL has its own currency, PL and Southern Somalia though they are the same country the 1 shilling note in PL looks different than the 1 shilling note in Xamar. In other words you can't pay with the shilling from Xamar in Puntland and vice versa
BebsiBolice
Suicidal men adore me.
which is stupid. I don't understand how the gov are gonna get investors and get the economy up with a worthless currency that no one uses.
^ yes also somali shilling has the best spot rate in africa 
No, it's terrible idea to adopt another country's currency especially for country the size of Somalia.
The trouble with using another country's currency or even pegging your currency to another is you're beholden to the other country's monetary policy. You lose your monetary policy autonomy; when the country of the currency you adopted cuts interests rates to zero it's not thinking about your own monetary interests. If you are experiencing large trade deficit you can devalue your currency so that you exports become cheaper.
The trouble with using another country's currency or even pegging your currency to another is you're beholden to the other country's monetary policy. You lose your monetary policy autonomy; when the country of the currency you adopted cuts interests rates to zero it's not thinking about your own monetary interests. If you are experiencing large trade deficit you can devalue your currency so that you exports become cheaper.
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