[via WiserNow] Iraq has...brought a new in country rate...We heard about this New Year's Day...in Iraq, they're removing...the higher denominations, the 25k dinar notes, the 10k, the 5k, the 1k...the high three zero dinar notes...
Now those are notes that we have that we're going to be able to exchange at a very high rate, very high...We're getting huge rates on the dinar that we have...but in Iraq they're... exchanging those with 25 dinar, 10 dinar, 5 dinar, 1 dinar, in other words, without the three zeros...lower denominations...
they're making those announcements on television in Iraq...We look like we could get started... They're calling it the weekend ...as late as Sunday, we should be getting our notifications...and we should be able to get started with our exchanges.
/ Special.. Economic expert Mustafa Akram Hantoush confirmed today, Saturday, that the banking system is going through a major crisis, pointing out that the Gulf and Jordanian banks have come to control the cash and dollar sector inside Iraq.
Hantoush said in a statement to Al-Maalouma Agency, “The Iraqi banking system is almost non-existent at the present time, as four or five Gulf and Jordanian banks control the movement of money.”
He added that “four Jordanian banks submitted applications to enter the Iraqi market, two of which succeeded in operating, while two others, namely Al-Ittihad and Al-Iskan, are still under study.”
He explaine
d that “this situation reinforces the dominance of these banks over the dollar, while local banks are now facing major challenges, as some of them remain in the market, while others are forced to seek agreements with Jordanian and Gulf banks in order to continue operating,” adding that “those who do not succeed in reaching agreements with these banks will move towards merging or exiting the market.”
He pointed out that “the banking system was previously suffering from a weak structure, and today it is in a state of complete collapse,” stressing that “it has become very difficult to obtain loans in Iraq easily, and whoever succeeds in doing so needs relationships and mediation, which reflects the state of stagnation and paralysis in the Iraqi banking system.”
It is noteworthy that the United States imposed sanctions on 34 Iraqi banks in an attempt to restrict the Iraqi economy, which opens the way for five Jordanian and Gulf banks to enter the Iraqi market, with the aim of completely controlling the economy amid the silence of the Iraqi government.
Chapter: The Future of Iraq’s Currency and Economic Landscape
Introduction
The transformation of Iraq’s economic and financial landscape is a pivotal topic in contemporary discussions regarding international trade and currency valuation. Central to this transformation is the transition from the traditional dollar auctions to a novel monetary reinforcement mechanism that aims to stabilize the Iraqi dinar while fostering global integration.
This chapter delves into the implications of these changes for Iraq, exploring the role of the Central Bank of Iraq, the evolution of international banking relationships, and the anticipated impacts on inflation and trade. Essential vocabulary such as global integration, correspondent banks, and electronic platforms will be emphasized to illustrate the complexity of these developments.
The Shift from Dollar Auctions to a New Monetary Mechanism
Historically, Iraq relied heavily on dollar auctions to facilitate trade and stabilize its economy, a practice initiated by the Central Bank of Iraq around 2003. However, recent announcements indicate that this system is being phased out in favor of a more efficient electronic monetary reinforcement mechanism. This shift is not merely procedural but represents a strategic move towards integrating Iraq into the global financial system.
The Deputy Governor of the Central Bank confirmed the initiation of this electronic system, which is expected to enhance the efficiency of external transfers and align Iraq’s financial operations with international standards.
The new mechanism allows Iraqi banks to engage directly with correspondent banks for foreign currency transactions, a significant step towards reducing dependence on US dollars.
Enhancing International Trade Relations
The integration of Iraq into the global economy is further supported by the establishment of electronic platforms that connect with various international entities, including the World Customs Organization and the World Trade Organization. These relationships are integral to Iraq’s strategy to streamline its international trade operations.
The implementation of an electronic platform called the ice cuta system aims to reduce corruption and improve administrative efficiency.
The Central Bank’s transition to this system is seen as a move to enhance Iraq’s appeal for foreign investment, thereby boosting international financial confidence.
By aligning with international standards and engaging in direct transactions through correspondent banks, Iraq is poised to facilitate smoother trade relationships with other nations, particularly in the Middle East.
The Role of Correspondent Banks
Correspondent banks play a crucial role in this new economic framework, serving as intermediaries for foreign currency transactions. The transition to using these banks signifies a departure from the previously centralized approach of dollar.
Government advisor indicates significant growth in non-oil GDP in 2024
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, confirmed today, Saturday, that the growth rates of the non-oil gross domestic product will rise in an unprecedented manner during the year 2024, while indicating that the government program has succeeded in controlling financial diversity in the general budget and the national economy in general.
Saleh told the official agency that “the high growth rates of non-oil GDP were accompanied by an important role for monetary policy and its role in regulating the monetary sector under Central Bank Law No. 56 of 2004,” adding that “this monetary policy is sound and has not strayed from the circle of consultation and cooperation with the fiscal policy and the government economy, which still dominates 65% of GDP and 98% of foreign exchange flows.”
He pointed out that “the financial sector contributed, through the dissemination of some developmental government borrowing tools, and the sources of formation of those foreign reserves from oil revenues, to building the monetary base, and then building the money supply in the country.”
The Prime Minister’s financial advisor expected “the continuation of the calm approach to financial policy during 2025, which contributed to deepening the circle of consultation and close cooperation with the Central Bank and its monetary policy in regulating the liquidity of the general budget and the stability of the macroeconomy without intersection or isolation,” noting that “this matter enhanced the success of the country’s economic policy during 2024 in international and regional circumstances that were extremely complex.”
