Thursday, September 12, 2024
Central Bank of Iraq announces comprehensive banking reform map, 12 SEPT
Central Bank of Iraq announces comprehensive banking reform map
9/8/2024 Samir Al-Nusairi
After the Central Bank delegation returned from the last round of negotiations with the US Treasury and the US Federal Reserve, it revealed the roadmap for radical and comprehensive banking reform, which begins with working to cancel...
The electronic platform for foreign transfers, which was implemented as a first stage to reorganize financial transfers in a way that ensures proactive control over them instead of subsequent control. This was a temporary exceptional measure and a gradual shift was planned towards building direct relationships between banks in Iraq and foreign correspondent and approved banks, mediated by an international auditing company to conduct pre-audit of transfers before they are executed by correspondent banks.
During the year 2024, up until now, 95% of the transfer process from the electronic platform to the correspondent banking mechanism directly between it and Iraqi banks has been achieved. This means that only about 5% of it remains within the platform, which will be transferred using the same mechanism before the end of this year, according to the plan.
Thus, some expectations about possible effects on the exchange rate and transfer operations are baseless, because the process will not be sudden or in one go at the end of this year, but rather it was originally achieved during the past period with effort and careful follow-up, except for the remaining small percentage that will be accomplished in the coming short period.
The Central Bank confirms that trade with the United Arab Emirates, Turkey, India and China represents about 70% of Iraq’s foreign trade as (imports), which prompted the Central Bank of Iraq to find channels for transfer in euros, Chinese yuan, Indian rupees and UAE dirhams, through approved correspondent banks in those countries. (13) Iraqi banks have actually begun to conduct transfer operations with a pre-audit mechanism that has been agreed upon and approved in addition to transfers in dollars.
Providing channels for personal transfers for legitimate purposes and external purchases through electronic payment channels, global money transfer companies, cash sales to travelers, and paying cash dollars for incoming transfers to the parties and purposes specified in the Central Bank’s published instructions.
The Central Bank stresses that it has placed foreign transfer operations and meeting dollar demands on sound tracks consistent with international practices and standards and the Anti-Money Laundering and Terrorist Financing Law.
He explains that providing the aforementioned channels for all purposes at the official dollar price makes this price the true indicator of economic practices, which is proven by the reality of price stability and control of inflation, and any other price traded outside those channels is an abnormal price that those with unorthodox or illegal practices resort to, who move away from official channels in their dealings, so they bear the additional costs alone by purchasing at a higher price than the official price to delude others with the difference between the official price and others.
The map and mechanisms announced by the Central Bank will certainly lead to lifting the confusion and instability in the monetary market, which is prevalent due to the continued imposition of American restrictions on our private banks and directing accusations, slander, rumors, analyses, interpretations and targeting of the Central Bank, and will create a state of optimism by lifting the restrictions imposed on some private banks.
This means that there are great efforts made by the Central Bank, in cooperation with the government, since the beginning of 2023 until now, in the field of implementing the financial and banking reform program and fruitful coordination with financial policy, which refutes the slander.
And the accusations and spreading optimism and reassuring the market and citizens. This is what the Governor of the Central Bank had previously emphasized before the Central Bank delegation’s recent trip to America. And the new reform roadmap is a result of the efforts previously made and which the Central Bank has been working on for a year and eight months, and it is as follows:
- Reorganizing foreign trade financing to achieve several goals at once, one of which is the transparency of foreign transfer operations that begin with the transfer process and the transferor to the final beneficiary and to the source through all data, documents and information that enhance and match reality.
All large and medium-sized companies are committed to achieving this goal. The problem now is the dealings of small traders outside the operations.
Foreign transfers are a pressure on the dollar money market and cause it to rise.
- The Central Bank opened channels for the Chinese, Turkish, Indian and Emirati currencies, which are currencies that represent a significant weight in foreign trade, as there was a halt for a period due to a new regulation aimed at providing sufficient control over these operations.
“A new audit mechanism has been put in place by an international company, and the process has been finalised and is now being restarted.”
The Central Bank has continuously urged the opening of relations with correspondent banks, because the Iraqi bank without having external correspondents is considered a local bank and cannot open up to the world.
The Central Bank, for its part, supports and assists this trend.”
- “In light of the new regulation of the foreign exchange process, the real price at which the Central Bank sells more than $250 million daily at the official price should be considered. This means that the bank covers foreign trade, and this explains why there is no inflation or price increases.
The parallel market is a market for those who do not want to go towards the regular methods of transfer and it is an illegal trade or trade that escapes the regular procedures or other illegal operations such as drug trafficking, human trafficking, corruption money, etc.
- Whether the dollar price rose or fell is not a correct indicator, as one must look at what and how much the Central Bank sells at the official price to liquidate various needs.
- That "the primary objective of the Central Bank is to maintain the general level of prices and limit inflation, and this is supposed to be the measure of the success of monetary policy, which has succeeded in controlling this aspect and the level of inflation compared to other countries and even in previous years is much lower, and within the target, and this means that foreign trade, on which Iraq depends primarily to meet the needs of citizens, is covered by the official price."
- “There is great praise in all meetings with international organizations, including the International Monetary Fund, the Federal Reserve, and the US Treasury, for the transformations, management, and organization of the external transfer process in the Central Bank of Iraq at the present time.”
And that "the Central Bank's plan until the end of the year will reach 100%, with foreign transfers between Iraqi banks and correspondent banks, without going through the US Federal Reserve.
The plan to reform and lift restrictions on banks includes two axes: the first relates to conducting an audit of previous operations that were suspected by an independent external audit office, some of which have been completed while we await the completion of the audit of others in order to determine the overall picture and classify the nature of these problems and how procedures will be carried out regarding them later.
And to reach a real, stable banking sector that is consistent with what is required at the level of the national economy, and to prevent some banks from remaining marginal and not representing a real addition to the Iraqi economy, and to gain external acceptance through agreement on their implementation of international policies, procedures and standards.
- The Central Bank has not set a quota for foreign transfers for banks, and they can submit whatever foreign transfer transactions they can attract. The Central Bank does not interfere in customers’ choices, and the banks that carry out this process rely on their capabilities to attract their customers. LINK
A CONVERSATION WITH MY CBI CONTACT BY MNT GOAT, 12 SEPT
Mnt Goat
I was...told Wednesday in my conversation with my CBI contact that Baghdad now has installed the huge TV screens...They also told me that they are getting ready to broadcast the swap out of the currency video...they do not expect to conduct the swap out until late this year, after the US elections and my information tells me that January is most appropriate....recently they have told us this electronic platform is going away at the end of 2024... corruption and money laundering is now all ending and has to end or we will not see any reinstatement. T
he instrument to do this is the Electronic Banking practices...
Having the US Treasury inside of Iraq now helping with all these banking reforms is a VERY good thing not a negative issue. It is absolutely going to push the RV process for us...We might even say it is the LAST piece to put in place in the RV puzzle to clearly see the end to this RV saga.
"IRAQI CITIZENS OPEN BANK ACCOUNTS FOR THE MONETARY REFORM!!!" BY FRANK26, 12 SEPT
KTFA
FRANK26: "IRAQI CITIZENS OPEN BANK ACCOUNTS FOR THE MONETARY REFORM!!!"......F26
Barzani to Al-Alaq: The number of registered individuals in the “My Account” banking project has exceeded half a million
9/9/2024
- Baghdad
Kurdistan Regional Government Prime Minister Masrour Barzani confirmed today, Monday, that the number of people registered in the "My Account" project has exceeded half a million individuals.
A statement by the Central Bank, received by "Al-Eqtisad News", stated that "the Prime Minister of the Kurdistan Regional Government, Masrour Barzani, received the Governor of the Central Bank of Iraq, Ali Mohsen Al-Alaq."
He explained that "during the meeting, the Prime Minister highlighted the reforms achieved in the banking sector in the Kurdistan Region, and touched on the (My Account) banking project, in which the number of registered public sector salary recipients has exceeded half a million individuals so far, as it is expected that the salaries of two hundred thousand newly registered people will be disbursed through (My Account) next month."
He pointed out that "the two sides agreed on the importance of continuing the project, and supporting and following up with the Central Bank."
The Prime Minister of the Region expressed his "thanks to the Governor of the Central Bank for his distinguished support for the (My Account) project, and for the banking reforms in the Regional Government," noting "the growing interest of local and international financial institutions in coordination, cooperation and support for the financial strategy of the Regional Government."
He continued, "The meeting discussed accelerating the achievement of financial inclusion in the Kurdistan Region, as part of the strategic goals of the Central Bank of Iraq and its steps towards digitizing the banking sector."
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Kurdistan Finance: “My Account” Banking System Provides Loans Worth 15 Million Dinars to Employees
9/8/2024
The Minister of Finance and Economy in the Kurdistan Region, Awat Sheikh Janab Nouri, stated on Sunday that the "My Account" banking system will provide advances and loans of no less than 15 million dinars to employees who have deposited their salaries in this account.
The Ministry of Finance and Economy quoted Nouri as saying that the "Hisabi" system is an advanced banking system, adding that most salaried employees are expected to register in this system by the end of this year.
He added that through this system, employees can obtain advances and loans worth 15 million or more.
On Tuesday, September 3, Kurdistan Region Prime Minister Masrour Barzani described the banking system in the region as “more powerful and effective,” while stating that 500,000 public sector workers had been introduced to the “Hisabi” banking system approved by the regional government for the disbursement of salaries and financial dues.
LATEST FROM PIMPY, 12 SEPT
Pimpy
They have to do something about that parallel market. The reason why it's so successful is because people prefer to get the US dollars if they can. If businesses and travelers want to get more bang for their buck, they don't have a problem with selling the US dollars for more Iraqi dinars, more than the official exchange rate. It puts Iraq in a pickle...Do they raise the rate of the Iraqi dinar or do they lower it?
Article: "The parallel market will be overturned. Sources: Upcoming decisions from he central bank that will confuse the markets and raise exchange rate."