Iraq is set to have more digital banks than its neighboring countries, with the Central Bank Governor expressing confidence in their shift towards digital banking.
Global Attention: An electronic payment conference is underway in Iraq, attended by representatives from international central banks, ministries, and financial institutions, indicating global interest in Iraq's financial stability.
Blockchain Under the Radar: While not explicitly mentioned, the use of blockchain-oriented systems and technologies is hinted at, with references to enhanced transparency, fraud detection, and compliance.
Economic Leap: Iraq is witnessing a significant shift from a cash-based economy to digital payments, with the government's e-governance policies driving this transformation.
Global Integration: The Arab Monetary Fund's involvement signals Iraq's integration into the global economy, with digital diversity and foreign investment on the horizon.
Iraq trades more than two trillion dinars electronically in a month
The Executive Director of the Iraqi Private Banks Association, Ali Tariq, revealed on Sunday the volume of electronic trading in the country during the month of August, confirming that it exceeded two trillion Iraqi dinars.
Tariq told Shafaq News Agency, "The value of electronic trading in the past month of August alone exceeded two trillion Iraqi dinars," indicating that "the amount was transferred and traded using electronic payment systems of various types, whether cards or payment systems."
Tariq pointed out that "the amount reached two trillion dinars for only one month, and this amount will double to more than that in the coming months."
He explained that the number of electronic cards reached 20 million cards, which means that approximately 50% of the Iraqi population own electronic payment cards, and some citizens own two or three cards.
Tariq concluded by saying, “The number of electronic payment devices in the public and private sectors has exceeded 30,000 devices.”
In October 2023, the Iraqi Council of Ministers issued several executive measures related to the electronic payment system and electronic points of sale (POS), and said at the time in a statement that they "aim to enhance the use of electronic payment in Iraq and facilitate financial and commercial operations." link
Article: "6 scenarios that the Iraqi Central Bank will work on, narrated by Al-Issawi "
Quote: "The economic expert stated that the Central Bank of Iraq is negotiating with the US Federal Reserve regarding ending the work of the electronic platform for foreign transfers and replacing it with direct banking relations between Iraqi banks."
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Article: "Iraq buys nearly 52 tons of gold in three years" Quote: "According to the latest schedule published in September by the Council...Iraq bought 51.9 tons of gold during the previous years from 2022 until September2024...Iraq bought 33.9 tons of gold in 2022, 12.3 tons in 2023, and 5.7 tons in 2024, including 3.1 tons in February and 2.6 tons in May."
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Article: "Iraqi state banks account for 88% of banking sector investments"
Quote: "The Prime Minister's Advisor for Economic Affairs, Mazhar Mohammed Salih, confirmed...government banks account for 88% of the banking system's investments, pointing out the necessity of reforming the banking system on the basis of market work, similar to international banks."
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Article: "Prime Minister's Advisor: Central Bank Decisions Contribute to Reducing Inflation Rates in the Country"
Quote: "The financial advisor to the Prime Minister, Mazhar Mohammed Saleh, explained that the decisions of the Central Bank contribute to reducing inflation rates in the country, and pointed out that economic growth contributes to strengthening the value of the local currency
"
Article: "Zaha Hadid Architects Unveils Construction Progress of Central Bank of Iraq Skyscraper in Baghdad"
Quote: "The Central Bank of Iraq (CBI) headquarters...is a new landmark on the banks of the Tigris River in Baghdad. Now the tallest building in the city, the 170-meter-tall skyscraper aims to echo the values of the institution: solidity, stability, and sustainability."
Impact of Iraq Approving HCL Law on Iraqi Dinar Value in 2024
The approval of the Hydrocarbon Law (HCL) in Iraq in 2024 could have significant implications for the value of the Iraqi dinar. This law is designed to regulate the country's oil and gas sector and aims to attract more international investments.
Historical Context of the Iraqi Dinar
To understand how the HCL might affect the dinar, it's important to review the historical context of the currency's valuation. In December 2020, the dinar was devalued by 23%, primarily due to the fiscal crisis and the drop in oil prices. This was intended to help the Ministry of Finance obtain more dinars for each dollar of oil revenue. In February 2023, there was a revaluation, increasing the value of the dinar from 1,450 to 1,310 per dollar. This revaluation was beneficial for importers but negatively impacted exporters of non-oil goods.
Current Exchange Rates and Challenges
As of September 16, 2024, Iraq is dealing with dual exchange rates. The official exchange rate is approximately 1,310 Iraqi dinars per US dollar, while the market rate is higher, at around 1,460 Iraqi dinars per US dollar, representing a 12% gap between the two rates. This dual rate system has several negative effects on Iraq's economy, including slowing economic growth, encouraging corruption, and complicating fiscal policy.
Impact of Dual Exchange Rates
The existence of dual exchange rates can have the following effects: Slows economic growth: It disrupts existing contracts and discourages trade and investment both domestically and internationally. Encourages corruption:Individuals and entities can profit from the difference between the official and market rates by being paid in dollars and making payments in dinars. Complicates fiscal policy: It makes it harder for the government to manage the economy effectively.
Potential Effects of the HCL Law on the Dinar
The HCL law, by allowing foreign companies to have a share of oil output in Iraq in partnership with the government, could lead to increased foreign investment and potentially stabilize the country's economy. This, in turn, could strengthen the dinar by reducing the gap between the official and market exchange rates.
Investor-Friendly Environment
By offering improved terms and contract structures, Iraq aims to create a more investor-friendly environment. This could attract more international oil companies to invest in Iraq, leading to an increase in oil production and, consequently, a boost in government revenues.
Boost in Government Revenues
An increase in oil production and foreign investment could lead to a boost in government revenues. This could potentially lead to a stronger Iraqi dinar, as the government would have more resources to manage the economy and potentially reduce the gap between the official and market exchange rates.
Conclusion
The approval of the HCL law in Iraq in 2024 could have a significant impact on the value of the Iraqi dinar. By attracting more foreign investment and potentially stabilizing the country's economy, the law could strengthen the dinar and reduce the gap between the official and market exchange rates.
[via PDK] The chatter from Iraq has been exceptional...It’s very possible this is our week…Lets see if all the hype is right.
MZ: It’s very possible this is our week…Lets see if all the hype is right
MZ: “ A parliamentary delegation to visit the Kurdistan region next week on the salaries of employees” This article came out before the weekend….so it’s this week…..This is one of the hiccups that is keeping HCL from passing. So they are in the Kurdish region supposedly working on this….what is supposedly one of the last hiccups with passing publically the HCL….Maybe?.....Finally?
If we get the HCL we should get a new value on the dinar.
MZ: There are no lower denominations on the streets yet. Seems to be rumors so far….but, they have been preparing and training all the bank staff on the new lower denominations. If they did not have any plans on putting the into circulation soon….they would not be giving them cut sheets…or pictures on the security features….They would not be training them yet.
