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Perfectionist

So Is The Iranian Oil Bourse Opening Tomorrow ?

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Maybe the Yanks have scared them out of the idea ..... ?

Article saying the IOB makes no differance to anything : http://globaleconomicanalysis.blogspot.com...-it-matter.html

Article saying the IOB will bring about the demise of America : http://www.financialsense.com/editorials/p.../2006/0120.html

I like to be balanced :)

Edited by Perfectionist

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Where did you hear that ??

Agreed, it will take a good few years to establish itself ......

But, if Iran has got agreements in place with the other oil producing nations and has agreements with some of the big buyers like China, India ...... then its gonna be off to a running start ......

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They had the British guy who's been setting this bourse up for the last few years on CNBC last week. He said they were behind schedule but should be ready to start trading petro-chemicals from the middle east in euros very soon. Perhaps even as soon as next month.

He was asked about when the ability to trade crude would occur and he started saying that there are all sorts of problems in trading crude oil in euros for now as there simply aren't enough euros in circulation. He said that it may be up to 18 months before the ECB would be prepared to print the amount of euros needed but that would be something you'd have to take up with them. He was just in charge of setting up the system.

If it was just petro-chemicals from that region that is traded in euros i'm not sure how much of a threat to the $ this bourse will have, for now......

It certainly gives them more time to apply diplomatic pressure to the Iranian's than I had previously thought.

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He was asked about when the ability to trade crude would occur and he started saying that there are all sorts of problems in trading crude oil in euros for now as there simply aren't enough euros in circulation. He said that it may be up to 18 months before the ECB would be prepared to print the amount of euros needed but that would be something you'd have to take up with them.

How very interesting.

The ECB doesn't need to print up actual notes to enable oil-trading in Euros. Unless IOB's transactions are to be finalised with cash-settlement. Which seems unlikely to me.

So if we eliminate the cash requirement our next option would be an accounting requirement, ie Euros existing as digital units in buyers' accounts. Which is easy to do: you simply state the value of your assets in Euros and then borrow against them, write a bond against them, or collaterise them using any of several well-trodden paths. Usually it involves an investment bank (as opposed to ECB-like bank), or other bank-like financial institutions. Or syndicate of same. This is what the bulk of the "upper" end of the financial industry does as its bread and butter business.

When we look at Euro-bought oil this way, we have a couple of choices. If the system imitates the current US dollar oil-buying system, then certain banks might be "tasked with" (chortle - "benefit from", more like) holding "petro-Euros" to ensure that buyers' and sellers' volumes can be matched and settled without disconnects and unnecessarily high interest payments on any bridging loans required.

Banks themselves can create very high levels of accounting cash entries in currencies like the Euro by simply writing derivatives or through the disgusting practice of fractional reserve lending (AKA fractional reserve credit creation).

One course of the fractional part of the Euros required might be the creation and issuance of Euro-bonds by the ECB or by Euro countries or by that and Euro taxation (these are the same thing really, in that all government bond debt is backed by taxation of the residents).

However, I am getting too detailed. My point is that creation of sufficient Euros to create a trading reserve is improbable as a reason for delaying the openeing of the IOB.

I'm not an insider BTW: the above is just logic based on looking at how the components of our existing systems work.

Edited by longjohn

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How very interesting.

The ECB doesn't need to print up actual notes to enable oil-trading in Euros. Unless IOB's transactions are to be finalised with cash-settlement. Which seems unlikely to me.

So if we eliminate the cash requirement our next option would be an accounting requirement, ie Euros existing as digital units in buyers' accounts. Which is easy to do: you simply state the value of your assets in Euros and then borrow against them, write a bond against them, or collaterise them using any of several well-trodden paths. Usually it involves an investment bank (as opposed to ECB-like bank), or other bank-like financial institutions. Or syndicate of same. This is what the bulk of the "upper" end of the financial industry does as its bread and butter business.

When we look at Euro-bought oil this way, we have a couple of choices. If the system imitates the current US dollar oil-buying system, then certain banks might be "tasked with" (chortle - "benefit from", more like) holding "petro-Euros" to ensure that buyers' and sellers' volumes can be matched and settled without disconnects and unnecessarily high interest payments on any bridging loans required.

Banks themselves can create very high levels of accounting cash entries in currencies like the Euro by simply writing derivatives or through the disgusting practice of fractional reserve lending (AKA fractional reserve credit creation).

One course of the fractional part of the Euros required might be the creation and issuance of Euro-bonds by the ECB or by Euro countries or by that and Euro taxation (these are the same thing really, in that all government bond debt is backed by taxation of the residents).

However, I am getting too detailed. My point is that creation of sufficient Euros to create a trading reserve is improbable as a reason for delaying the openeing of the IOB.

I'm not an insider BTW: the above is just logic based on looking at how the components of our existing systems work.

Thanks for that explanation and from what you are saying he is probably just making an excuse as to why it won't be up and running ontime. I think he said he had been working on this for several years and i'm sure the Iranian's as well as the the other middle eastern memebers of OPEC wanted a reason for the delay.

One other point I remember him saying was that it took a few years to get them all to agree as the Saudi's kept on vetoing the bourse which is hardly surprising I guess given the close ties between the house of saud and the US.

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The big problem for the IOB is, I guess, who would want to deal large sums of money under the governance of the Iranian legal 'system'? The UAE have set up an independent commercial legal system for the Dubai International Finance Centre but the Iranians don't seem to be as progressive.

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  • 337 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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