Iran replaces dollar with euro

by jandsm Thu Dec 21st, 2006 at 04:34:17 AM EST

I am not an economist, but this seems to me a significant event with respect to the future development of the Euro as a reserve currency. Additionally the move by the Iranian government will also apply to the country's oil contracts.

From Al Jazeera:

The Iranian central bank is to convert the state's foreign dollar assets into euros and use the euro for foreign transactions.

"The government has ordered the central bank to replace the dollar with the euro to limit the problems of the executive organs in commercial transactions," Gholam Hossein Elham, a government spokesman, said on
Monday. [...]

Elham said that Iran's budget would in future be calculated in euros. "Until now the budget has been calculated according to revenues in dollars but this calculation will now change," he said. [...]

Elham implied that the move to the euro would also apply to Iran's oil revenues. "Foreign income sources and oil revenues will be calculated in euros and we will receive them in euros in order to put an end to our dependence on the dollar," Elham said.

A merry christmas and a happy new year! jan

Iran replaces dollar with euro | 17 comments (17 topical, 0 editorial, 0 hidden)

Re: Iran replaces dollar with euro (none / 1)

See this open thread discussion from 3 days ago.

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Thu Dec 21st, 2006 at 04:55:50 AM EST

Re: Iran replaces dollar with euro (none / 0)

And my take is that even if the Euro were used it's still deficit-based, and therefore inherently part of the problem, not the solution.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Thu Dec 21st, 2006 at 05:00:02 AM EST

Re: Iran replaces dollar with euro (4.00 / 2)

In this case the "problem" is the very real threat that the US will attempt to freeze Iran's dollar-denominated assets, so moving to Euros is a "solution".

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Thu Dec 21st, 2006 at 05:01:07 AM EST
[ Parent ]

Re: Iran replaces dollar with euro (4.00 / 2)

Which is of course smack on the button...but it's only a tactical solution.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Thu Dec 21st, 2006 at 05:26:01 AM EST
[ Parent ]

Re: Iran replaces dollar with euro (none / 0)

for what i read it is because of US sanctions, transactions in US$ are getting more and more difficult.

by fredouil (fredouil@gmailgmailgmail.com) on Thu Dec 21st, 2006 at 05:14:10 AM EST

Re: Iran replaces dollar with euro (4.00 / 2)

Much more of interest to me is that of where these Euro's are coming from.

I read somewhere that perhaps a third of Euro's exist in from of 500 Euro notes, which are for the most part sitting in suitcases under Spanish beds.

I don't see Jumbo-loads of these flying out of Gibraltar into Mehrabad airport so would it not mean the ECB has to issue gazillions of the electronic version?

And surely - using the conventional (bollocks) logic of ECB economists, that would be - God Help Us - INFLATIONARY!!!!

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Thu Dec 21st, 2006 at 05:32:56 AM EST

Re: Iran replaces dollar with euro (4.00 / 2)

In Spain people call €500 notes "Bin Ladens" because everyone knows they're there, but nobody has seen them.

Apparently a large fraction of the entire Eurozone's issue of €500 notes is in Spain, somewhere.

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Thu Dec 21st, 2006 at 05:48:33 AM EST
[ Parent ]

Re: Iran replaces dollar with euro (none / 1)

See, for instance, here

26% of all 500 € notes were issued in Spain

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Thu Dec 21st, 2006 at 06:26:14 AM EST
[ Parent ]

Re: Iran replaces dollar with euro (4.00 / 2)

And I thought I read somewhere that these notes are a very large proportion of euro's "in circulation" (although circulating is the last thing they do under beds..)

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Thu Dec 21st, 2006 at 06:35:00 AM EST
[ Parent ]

Re: Iran replaces dollar with euro (4.00 / 2)

Indeed.

20 Minutos: 60% of the money in circulation [in Spain] is in €500 notes (12 January 2006)

€500 euro notes make up 57,70 percent of the value of bills and coins put into circulation by the Bank of Spain until November [2005], which reaches €78.910 Bn (€76.118 Bn in bills and €2.792 Bn in coins).

(My translation)

What this money is doing is not circulate but dodge tax.

Now, it is to be expected that there will be more money in circulation at higher denominations than at lower ones, but 58% of all Spanish cash, and 26% of all the Eurozone's €500 supply is a lot of money to be moving under the table.

Oh, and I take the chance to flag the difference between Cash (coins and bills in circulation) and Money (liquid bank deposits) because while everyone keeps looking for "Bin Ladens" they fail to keep their eyes on the real ball, which is the "money supply". The press keeps perpetuating the misconception that money is created only when cash is minted or printed by the goverment/central bank, and not overwhelmingly by private credit institutions.

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Thu Dec 21st, 2006 at 06:45:34 AM EST
[ Parent ]

Re: Iran replaces dollar with euro (none / 1)

i have never seen a 500 euros note ;-)

by fredouil (fredouil@gmailgmailgmail.com) on Thu Dec 21st, 2006 at 07:39:20 AM EST
[ Parent ]

Re: Iran replaces dollar with euro (none / 1)

There are 91 million of them in Spain (according to the figures I quote) and 350 million in the whole Eurozone, so it shouldn't be that hard.

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Thu Dec 21st, 2006 at 07:42:49 AM EST
[ Parent ]

Re: Iran replaces dollar with euro (4.00 / 2)

Oh, but you're in Australia...

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Thu Dec 21st, 2006 at 07:43:10 AM EST
[ Parent ]

Spain 500 euros bills (none / 1)

spain GDP is around 855 billions euros, 57.7% of 78.9 billions is 45.5 billions, that's 5.3% of GDP in 500 euros bills.

Not bad.

by Laurent GUERBY on Thu Dec 21st, 2006 at 05:10:12 PM EST
[ Parent ]

Re: Spain 500 euros bills (none / 1)

That money is probably unaccounted for in the GDP. I wonder what the 'velocity of money' is in Spain's underground economy.

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Thu Dec 21st, 2006 at 05:17:37 PM EST
[ Parent ]

Re: Iran replaces dollar with euro (none / 1)

FCOL! I took my bed apart for nothing. But then I don´t play with real estate people.

Our knowledge has surpassed our wisdom. -Charu Saxena.

by metavision on Thu Dec 21st, 2006 at 05:57:49 PM EST
[ Parent ]

Re: Iran replaces dollar with euro (none / 1)

From Iran´s point of view, it was to be expected even sooner. It will take a long time for W to find out.

Our knowledge has surpassed our wisdom. -Charu Saxena.

by metavision on Thu Dec 21st, 2006 at 06:02:34 PM EST

Iran replaces dollar with euro | 17 comments (17 topical, 0 editorial, 0 hidden)

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Iran replaces dollar with euro

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