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After the decision to cancel the platform.. Will we witness a crazy rise in dollar prices in Iraq?
11/29/2024
News - Local
In a move that has attracted the attention of economic and financial circles, the Governor of the Central Bank, Ali Al-Alaq, announced the bank’s intention to cancel the electronic platform for financial transfers early next year.
This decision comes as part of a series of reforms aimed at facilitating financial procedures and stimulating the economy, but at the same time it raises questions about its potential impact on the stability of the dinar exchange rate.before American.
The concept of the electronic platform and its role in currency stability
The electronic money transfer platform is a mechanism adopted to ensure the regulation of foreign money transfers and to limit the manipulation of exchange rates.
The platform documents commercial transactions and money transfers by banks and financial companies, ensuring more effective control over hard currency flows in and out of the country.
This platform has greatly contributed to narrowing the gap between the exchange rate.And priceBlack, where it prevented many money laundering and smuggling operations.
However, with the decision to cancel this platform, questions are raised about how it will be regulated.And transfer management.
The impact of deplatforming on the price
1. Increased demand for in Black, with the absence of an electronic platform, the demand for it may increase.in Black money is the result of the absence of control mechanisms, which leads to higher exchange rates outside official channels.
2. Weak confidence in the dinar, as cancelling the platform may weaken confidence in the Iraqi dinar, especially if effective alternatives are not put in place to ensure stability.Lack of confidence means that citizens and investors are likely to withdraw their money in dinars and transfer it to As a safe haven.
3. The impact of smuggling and money laundering, as cancelling the platform could cancel strict control over smuggling operations. Smuggling and money laundering practices may expand, increasing demand forSignificantly and affects the central bank's reserves.
4. Accreditation On supply and demand, with the platform being cancelled, the currency market may become more affected by direct supply and demand. This may lead to extreme fluctuations in the exchange rate, especially in unstable economic and political conditions.
Chances of facing a rise
1. Activating alternative control tools
The government and the central bank can rely on other supervisory tools such as strengthening the role of local banks and imposing strict restrictions on foreign transfers.
2. Increase reserves of
The Central Bank may resort to pumping more dollars intoTo meet demand and maintain price stability.
3. Promoting local investments
By encouraging investment and reducing dependence on foreign currencies, pressure onAnd strengthen the dinar.
4. Cooperation with international organizations
The government may cooperate with international institutions such as the International Monetary Fund and the World Bank to develop economic plans that contribute to stability..
The decision to cancel the electronic platform for money transfers represents a major challenge to the Iraqi economy, and may have direct effects on the exchange rate. In front of the dinar. To achieve economic stability in the next phase, it will be necessary to take proactive measures to compensate for the absence of the platform and ensure the continuity of supervision overFinancial.
The balance between facilitating economic procedures and protecting the national currency will be the decisive factor in determining the success of this decision and its effects on citizens and investors.
The Governor of the Central Bank, Ali Al-Alaq, confirmed in a statement to the official agency, which was followed by:“Next year, we will launch a new approach to expand and enhance citizens’ remittances for various purposes, such as travel, treatment, or any legitimate remittances abroad, just as we did for commercial remittances,” he said, noting that “there are also agreements currently in place with relevant companies such as Visa, Mastercard, MoneyGram, Western Union, to establish a new framework for implementing these operations, which will constitute another shift in controlling these operations.”
Al-Alaq added, "Next year or the beginning of next year 2025 will witness the completion of the current procedures, and we seek to provide reassurance, especially with some people's questions about the fate of transfers after the completion of the electronic platform at the end of this year 2024."
“There is no sudden transition, but rather a gradual transition that began in 2024, where the banks’ relationship was transferred directly to correspondent banks without passing through other links, and the process has been completed with continued success,” he continued, stressing that “more than 95% of this goal has been achieved, and this process will be completed successfully within the next two weeks,” noting that “there is international anticipation to celebrate this occasion.”