Stopping The Dollar Transfer Platform...A Calculated Step Or A Risky Adventure?
December 23, 2024 Baghdad/Iraq Observer The Central Bank of Iraq is scheduled to abandon the electronic platform for dollar transfers abroad at the end of this year, which has raised questions about whether this decision indicates the abandonment of the Iraqi Central Bank and the US Federal Bank’s mechanisms for monitoring the movement of the dollar,
or is it a step towards adopting a new system that may It contributes to reducing sharp fluctuations in the exchange rate and returning it to its natural levels that are consistent with the requirements of the local market and the national economy.
The electronic platform was launched in early 2023 as a new mechanism aimed at auditing dollar transfers before they are implemented, replacing the previous system that relied on auditing by the US Federal Bank after the transfers were completed, which was considered a step to enhance transparency, improve control of the movement of funds, and ensure compliance with financial laws.
At that time, banks, companies and merchants in Iraq faced major challenges in adapting to the new mechanism, as it required time to understand the working mechanisms and ensure compliance with the requirements.
However, these entities were able to adapt gradually, especially after bank employees underwent extensive training courses on using the electronic platform, which contributed to achieving full compliance with the new work procedures and ensuring the smooth flow of financial operations.
According to the new transfer mechanism, banking operations in dollars will be limited to banks that have international banking relationships, or what are known as “correspondent banks.”
Concern and reassurance
Both the Central Bank of Iraq and the US Federal Reserve believe that this step will contribute to strengthening oversight of remittances in a more precise and specialized manner, by restricting transactions to a limited number of banks that have high banking standards and the ability to cooperate with international banks, which aims to reduce financial risks and ensure Compliance with international control s.
In turn, Mustafa Akram, a researcher in financial and banking affairs, said that
stopping work on the electronic platform (FITR) and restricting dollar transfers to a limited number of foreign banks may pose challenges to the local banking system, indicating that
“this step may raise concerns about the concentration of transactions in dollars.” “In a limited range, which may lead to effects on exchange rate stability.”
At that time, banks, companies and merchants in Iraq faced major challenges in adapting to the new mechanism, as it required time to understand the working mechanisms and ensure compliance with the requirements.
However, these entities were able to adapt gradually, especially after bank employees underwent extensive training courses on using the electronic platform, which contributed to achieving full compliance with the new work procedures and ensuring the smooth flow of financial operations.
According to the new transfer mechanism, banking operations in dollars will be limited to banks that have international banking relationships, or what are known as “correspondent banks.”
Concern and reassurance
Both the Central Bank of Iraq and the US Federal Reserve believe that this step will contribute to strengthening oversight of remittances in a more precise and specialized manner, by restricting transactions to a limited number of banks that have high banking standards and the ability to cooperate with international banks, which aims to reduce financial risks and ensure Compliance with international control s.
In turn, Mustafa Akram, a researcher in financial and banking affairs, said that
stopping work on the electronic platform (FITR) and restricting dollar transfers to a limited number of foreign banks may pose challenges to the local banking system, indicating that
“this step may raise concerns about the concentration of transactions in dollars.” “In a limited range, which may lead to effects on exchange rate stability.”
Akram added to “Iraq Observer” that “there is a need for a deeper study of the impact of these measures on competitiveness in the Iraqi banking sector, while emphasizing the importance of preserving banking sovereignty and enhancing balance in the local market.”
Possible bounces
In light of these movements, news was raised about a trend towards making a new adjustment to the exchange rate, which raised concern among economists about the potential impact of this trend on the economic process in general.
Experts stressed that sudden changes in monetary policy may create additional confusion in the markets and weaken confidence in the financial system.
For his part, economic expert Uday Al-Alawi stressed that
“the biggest mistake the government can make is manipulating the dollar exchange rate through sudden decisions, because this has a direct impact on the national economy and undermines investors’ confidence in the financial system.” Al-Alawi added, in a press comment, that
“the government’s continued making of ill-considered decisions regarding the exchange rate will lead to the erosion of international and local confidence in the Iraqi economy, which will weaken the ability to attract the investments necessary to improve the economic reality.”
Economists fear the possibility of some banks not included in the transfers going to meet the requirements of their customers towards the parallel market, which could lead to a return to the rise of the dollar in Iraq. https://observeriraq.net/إيقاف-منصة-تحويلات-الدولار-خطوة-محسوب/
Possible bounces
In light of these movements, news was raised about a trend towards making a new adjustment to the exchange rate, which raised concern among economists about the potential impact of this trend on the economic process in general.
Experts stressed that sudden changes in monetary policy may create additional confusion in the markets and weaken confidence in the financial system.
For his part, economic expert Uday Al-Alawi stressed that
“the biggest mistake the government can make is manipulating the dollar exchange rate through sudden decisions, because this has a direct impact on the national economy and undermines investors’ confidence in the financial system.” Al-Alawi added, in a press comment, that
“the government’s continued making of ill-considered decisions regarding the exchange rate will lead to the erosion of international and local confidence in the Iraqi economy, which will weaken the ability to attract the investments necessary to improve the economic reality.”
Economists fear the possibility of some banks not included in the transfers going to meet the requirements of their customers towards the parallel market, which could lead to a return to the rise of the dollar in Iraq. https://observeriraq.net/إيقاف-منصة-تحويلات-الدولار-خطوة-محسوب/
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