Iraq’s Move to Ban US Dollar Transactions: A Comprehensive Analysis, 7 OCT

Iraq’s Move to Ban US Dollar Transactions: A Comprehensive Analysis

Iraq's Move to Ban US Dollar Transactions: A Comprehensive Analysis

A Historic Monetary Shift

Amid global economic fluctuations and the evolving landscape of international banking, Iraq has recently announced its plan to ban all cash transactions and withdrawals in US dollars by 2024. This major policy shift, unveiled by the Central Bank of Iraq (CBI), is expected to significantly impact not only the country’s financial institutions but also its socio-economic dynamics.

Unraveling the Motives

According to Mazen Ahmed, the CBI’s director general of investment and remittances, the decision is primarily aimed at curbing the misuse of funds. It is reported that approximately 50% of the $10 billion imported annually from the New York Federal Reserve is used illicitly. The move is also seen as part of a broader endeavor to de-dollarize the Iraqi economy, a trend motivated by a growing weariness of the US dollar among the populace due to the recurrent crises following the 2003 US invasion.

However, the policy change is not abrupt. Ahmed shared that dollars deposited before the end of 2023 will still be available for withdrawal in 2024. Post-2024, withdrawals will be permitted in local currency at the official rate. This measure is designed to gradually transition the economy towards reduced reliance on the US dollar, while minimizing immediate disruption.

Repercussions on the Economy and Beyond

Experts anticipate that this policy shift may potentially inflate the value of the Iraqi dinar, as demand for the local currency is expected to surge with the ban on dollar transactions. However, the CBI appears prepared for such a scenario. Ahmed stated, ‘The cost we are carrying today is nothing compared to this goal,’ signaling the Iraqi government’s willingness to pay the price for long-term economic stability.

Moreover, the decision may also impact Iraq’s relations with the US and other countries. The US, in particular, has a vested interest in Iraq’s financial affairs, given the substantial reserves of Iraqi oil revenues held by US banks. This new policy could potentially strain relations between Iraq and the US, which may have far-reaching implications.

Looking Ahead: Uncertainty and Anticipation

The ramifications of Iraq’s decision to ban US dollar transactions are yet to fully unravel. While the policy is a bold step towards financial sovereignty, it also brings with it a great deal of uncertainty. The subsequent developments in Iraq’s banking sector and the wider economy will be closely watched by analysts and stakeholders worldwide. Only time will tell whether Iraq’s audacious move will lead to long-term economic stabilization or precipitate unforeseen challenges.

https://bnn.network/finance-nav/iraqs-move-to-ban-us-dollar-transactions-a-comprehensive-analysis/

"RV UPDATE" BY MNT GOAT, 8 OCT

 Mnt Goat  

 I asked [my CBI contact in Iraq] about the project to delete the zeros and was told it is coming and is now an active project no longer just a later project. I asked for some target dates and was given that they planned to redenominate sometime prior to the end of the year. To me this is so inline what we are thinking for a January 2024 reinstatement timeframe and other events also lining up.

Clare  Wall Street Journal Article:   "Iraq Asked for $1 Billion in Cash. This Time, Washington Said No."  Quote:   "Iraq is seeking a special shipment of $1 billion in cash from the Federal Reserve Bank of New York, but U.S. officials have withheld approval, saying the request runs counter to their efforts to rein in Baghdad’s use of dollars and halt illicit cash flows to Iran.  Since the U.S. invasion of Iraq two decades ago, the U.S. has supplied $10 billion or more a year to Baghdad on semimonthly cargo flights carrying massive pallets of cash, drawn from Iraqi oil sales proceeds deposited at the Fed. In Iraqi hands, the bank notes have become a lucrative source of illicit dollars for powerful militias and corrupt politicians, as well as for Iran, U.S. officials say"

 Article:  "Iraq prohibits cash withdrawals in dollars as of the beginning of 2024". Quote:   "A senior official in the Central Bank of Iraq said that the country will ban cash withdrawals and transactions in US dollars as of January 1, 2024, in the latest effort to limit the misuse of the country’s hard currency reserves in financial crimes...dollars deposited in 2024 can only be withdrawn in local currency at the official rate of 1,320 dinars to the dollar.

Iraq and Turkmenistan Forge Energy Alliance: A Leap Towards Economic Diversification, 7 OCT

 Iraq and Turkmenistan Forge Energy Alliance: A Leap Towards Economic Diversification, 7 OCT

A Pivotal Agreement in Energy Cooperation

Prime Minister Mohamed Shi’a Al-Sudani of Iraq has lauded the initial agreement to import gas from Turkmenistan. The dialogue touched upon bilateral relations and cooperation in the energy and gas sector, with a particular emphasis on the Minister of State for Gas Affairs in Turkmenistan. This groundbreaking agreement, signed as a memorandum of understanding, aims to address Iraq’s dire need for gas to fuel its production stations and electrical system.

Strategic Importance For Iraq

The agreement comes at a crucial time for Iraq, which has faced difficulties in paying for gas imports from Iran due to US sanctions. Currently, between a third to 40% of Iraq’s power supply depends on these imports. This deal with Turkmenistan provides an alternative source of gas, thus reducing Iraq’s reliance on Iran while ensuring the continuous operation of its power plants. The final gas supply contract is slated to be signed by an Iraqi delegation in Turkmenistan by the end of the year.

Aligning With Iraq’s Energy Diversification Strategy

The arrangement aligns with the Iraqi government’s broader strategy of diversifying its energy sources. Prime Minister Al-Sudani stressed that the government is prioritizing the energy sector to stimulate economic development and diversity. He also underscored Iraq’s abundant gas resources and the importance of investing in them effectively. The import of Turkmen gas aids in diversifying gas import sources and energy sources in general.

Potential Ramifications and Future Prospects

The agreement serves as a testament to Iraq’s efforts to ensure energy security while fostering economic growth. It also signals a shift in the regional energy dynamics, potentially influencing future alliances and partnerships. As Iraq continues to leverage its abundant gas resources and diversify its energy sources, it paves the way for a more resilient and robust economy.

https://bnn.network/world/iraq/iraq-and-turkmenistan-forge-energy-alliance-a-leap-towards-economic-diversification/

Decoding Iraq’s Currency Crisis: De-dollarization, Exchange Rates, and Economic Ramifications, 6 OCT

 Decoding Iraq’s Currency Crisis: De-dollarization, Exchange Rates, and Economic Ramifications, 6 OCT

Decoding Iraq's Currency Crisis: De-dollarization, Exchange Rates, and Economic Ramifications

Unveiling the Currency Conundrum

The recent statement from a top Iraqi official denying the speculation that the exchange rate would reach 1700 has added another intriguing layer to Iraq’s complex economic narrative. This announcement diverges from earlier predictions, shedding new light on the nation’s currency exchange dynamics. To appreciate the full implications of this revelation, it is essential to delve into the history of Iraq’s currency situation, the current impacts on stakeholders, and potential future ramifications.

Historical Overview: A Turbulent Economic Journey

The landscape of Iraq’s economy has been dramatically shaped by its tumultuous history. The country has witnessed recurring wars, crippling sanctions, and political crises, all of which have left indelible marks on its monetary system. The 2003 U.S. invasion was a particularly pivotal moment, marking a shift towards a dollar-dominated economy. Despite the country’s rich oil reserves, the Iraqi dinar’s value plummeted, leading to a preference for the U.S. dollar among the population.

Fast forward to 2024, the Central Bank of Iraq (CBI) is set to implement a ban on cash withdrawals and transactions in U.S. dollars. This move is part of a broader strategy to curb financial crimes and the evasion of U.S. sanctions on Iran. The director-general of investment and remittances at the CBI, Mazen Ahmed, has stated that this measure will stamp out the illicit use of approximately 50% of the $10 billion that Iraq imports in cash from the New York Federal Reserve each year.

Understanding the Present: The Currency Crisis Unfolds

Despite the official exchange rate of 1,320 dinars to the dollar, the parallel market rate recently sat at 1,560, a discrepancy of roughly 15%. This disparity has stirred much speculation, with some predicting that the exchange rate would escalate to 1700. However, the recent denial by the Iraqi official provides a fresh perspective, contradicting these predictions.

Amidst the chaos, there are visible signs of frustration. Social media witnessed a surge of outrage, with videos circulating of a depositor threatening to burn down a Baghdad bank if he was not given his deposit in cash dollars. This incident echoes the desperate actions taken by depositors during Lebanon’s banking crisis, underscoring the severity of the situation.

Peering into the Future: Implications and Ramifications

While the immediate impacts of this currency crisis are apparent, the future ramifications are less clear-cut. The move towards de-dollarizing the economy could result in the dinar losing more value, according to Ahmed. However, he also asserts that this is an acceptable side-effect of formalizing the financial system. He contends that this will only affect those engaged in illegitimate transactions, as the CBI continues to provide dollars at the official rate for legitimate purposes.

These measures could potentially reshape Iraq’s economic landscape, influencing stakeholders ranging from everyday citizens to international investors. However, the road to economic stability is fraught with challenges. While the Iraqi government’s commitment to combating financial crimes and sanction evasion is commendable, the unfolding currency crisis serves as a stark reminder of the country’s fragile economic state.

Iraq Set to Ban Cash Transactions in US Dollars from 2024, 6 OCT

 Iraq Set to Ban Cash Transactions in US Dollars from 2024, 6 OCT

Iraq Set to Ban Cash Transactions in US Dollars from 2024

In an unprecedented move aimed at curbing financial crimes and promoting transparency, the government of Iraq has declared a ban on cash withdrawals and transactions in US dollars effective from January 1, 2024. The policy is a part of the government’s broader strategy to strengthen its financial system and encourage the use of its local currency, the Iraqi dinar.

A Bold Move Towards Financial Integrity

The decision to ban US dollar transactions is a significant step towards tackling financial crimes such as money laundering and terrorism financing in the country. The move also indicates Iraq’s commitment towards improving the integrity of its financial system. The Central Bank of Iraq is currently working on implementing mechanisms to enforce the ban and ensure compliance.

The Impact on Businesses and Individuals

This policy change is expected to have a substantial impact on businesses, individuals, and foreign investors who currently rely on US dollars for transactions. The transition to exclusive use of the Iraqi dinar may require significant adjustments, particularly for those entities with substantial financial operations and dependencies on the US dollar.

Concerns and Implications of the Decision

While the government’s move has been applauded for its intent, it has also raised concerns amongst financial experts. Key amongst these are the potential challenges and implications of shifting from a dual currency system to a single one in a relatively short span of time. Experts emphasize the need for adequate infrastructure, financial education, and awareness among the population to ensure smooth transition.

Looking Towards the Future

As Iraq moves towards implementing this new policy, the country stands at the threshold of a new financial era. With the right measures and support systems in place, the move could significantly enhance transparency and financial integrity. However, the transition will require meticulous planning, robust execution, and most importantly, the acceptance and cooperation of the Iraqi people.

https://bnn.network/world/iraq/iraq-set-to-ban-cash-transactions-in-us-dollars-from-2024/

The Impact of Rising Treasury Yields on the U.S. Economy | What It Means...

"RV UPDATE" BY JEFF, 6 OCT

  Jeff   

 A very very very important article came out... "Iraq prohibits cash withdrawals in dollar in early January 2024"  This is either very very extremely good new or very extremely bad news...

 Quote: "The country will ban cash withdrawals and transactions in dollars starting from January 1, 2024 in the latest effort to limit the misuse of the country's hard currency reserves in financial crimes"  

Again this is either very bad news or very good news.  If you receive it as good news it has nothing to do with the rate change specifically in the month of January.  The rate is not changing in January.

Article:   "The American decision still dominates Iraq.  What do we need to get rid of it?" 

 The United States still has possession and control over all of Iraq's OPEC dollars in Washington DC. 

 Quote:  "America is putting pressure on Iraq because it has not completely emerged from the UN resolutions..."  Those are the U.N. Chapter 7 sanctions.