STATUS OF THE RV . PART. 5
😊More good news from Iraq in the article titled “CENTRAL BANK: 20 IRAQI BANKS PRACTICE DIRECT TRANSFER OPERATIONS IN 8 FOREIGN CURRENCIES”. The Governor of the Central Bank, Ali Al-Alaq, confirmed today, Tuesday, that there are 20 Iraqi banks practicing direct transfer operations in 8 foreign currencies. Remember we read in December that it was only 4 correspondent banks and now it's eight.
At that time I told you my CBI contact said there were 10 in the process and so now we now have 8 of these 10 foreign banks (currencies). This is VERY IMPORTANT news because it shows to us that foreign banks are slowly opening-up to doing business with Iraqi banks and the dinar. Remember the process – merchants in Iraq take dinar,
the Iraqi banks send dinar electronically to the foreign banks that then convert the dinar (or exchange it) to the foreign currency of that country and pay the distributor for the imports to Iraq. But look at this as progress but still in its infant stages. It is like a beta test. Only 20 Iraqi banks and only 8 foreign currencies so far. It’s a start and you have to start somewhere. The glass is half-full!
_______________________________________________________
What else is in the news?
WILL IRAQ MOVE TO A FULLY DIGITAL CURRENCY?
And finally, I want to cover this question that may be on everyone’s mind. This is the VERY IMPORTANT question asking – Will Iraq go to a fully digital currency for the dinar? If you read a couple articles from today’s news you might get the impression they fully intend to move in this direction and plan to do it now. However, we must consider more than the headlines and read the full articles to understand. We must also look at the past news from the CBI on this topic.
So, what did the CBI tell us in the past? In an article from November of 2021 titled “THE CENTRAL BANK URGES CAUTIONS ON DIGITAL CURRENCIES” in Economy News channels, the Central Bank of Iraq (CBI) warned on Thursday, against dealing in digital currencies. The CBI media office stated in a statement received by the Iraqi News Agency (INA), that “The bank is closely following transactions in the digital, encrypted and virtual currency market, given the great risks associated with these currencies.
The statement added, “In order to avoid any negative repercussions resulting from dealing with these currencies, which are highly volatile and speculative, we urge caution against their use”.
Then yet another article in March of 2022 titled “IRAQ CBI: TRADING IN DIGITAL CURRENCIES” affirmed what was stated in our circular No. (125/5/9) on 3/29/2022, in which it was decided to prevent the use of electronic cards and wallets for the purpose of speculation and trading in digital currencies of all kinds. Take all necessary administrative, legal and technical measures to prevent and track such types of transactions and trades. educate your customers about the risks and procedures that will be taken against them according to the laws and instructions in force related to these transactions and trades. Otherwise, all strict legal measures will be taken against your institutions and customers in accordance with the Anti-Money Laundering and Terrorist Financing Law No. (39) of 2015 and the instructions issued thereunder in the event of non-compliance with the above.
Having read the “official” stance or policy of the CBI on this issue of digital currencies (see the two articles above) let’s go and read what just recently came out in the news from the Finance Committee. Remember that the finance committee is part of the government of Iraq (GOI) and not the CBI. It is part of Al-Sudani’s cabinet.
In the articles titled “FINANCIAL ADVISOR: CENTRAL BANK DIGITAL CURRENCY WILL BOOST TRANSPARENCY, IMPROVE NATIONAL PAYMENTS”
and
“SUDANESE ADVISOR: DIGITAL CURRENCY IS A QUALITATIVE LEAP THAT IMPROVES OVERSIGHT AND SUPPORTS COMBATING MONEY LAUNDERING”,
the financial advisor to the Prime Minister, Mazhar Mohammed Saleh, explained today, Saturday, that issuing a digital currency for the Central Bank will be an important step towards enhancing transparency and achieving a qualitative leap in the national payments system.
Saleh said in a statement to the official agency, followed by NRT Arabic, that “the Central Bank plans to issue a digital currency as a gradual alternative to paper currency,” noting that this step will contribute to reducing cash leakage and lowering the costs of printing paper currency, in addition to reducing the circulation of money outside the banking system.
So its seems according to this article that the CBI is now in favor of a digital currency for the dinar. It does say “gradual” and so when we don’t know when. This was not an announcement of a pending digital currency. It was an informative article only. Will the CBI itself speak up on this issue being that the finance committee already “spilled the beans” on it?