Today, Friday, the Governor of the Central Bank of Iraq, Ali Al-Alaq, announced the start of supplying the dollar into the country through the accounts of Iraqi banks abroad, and while he indicated the end of the procedures to open accounts in the UAE dirham and the understanding with Turkey to make transfers in the euro or the Turkish currency, he revealed a broad plan to reform and develop private and government banks. .
Meeting with the US Treasury and the Federal Reserve
Al-Alaq said in an interview with the official news agency, followed by Al-Mutla’, that: “The Central Bank of Iraq is in constant communication with the US Treasury Department and with the US Federal Bank,” indicating that “this communication continues permanently, and there are quarterly meetings held to review all matters related to this framework.” Relationship”.
He added, “There is a meeting that will be held at the beginning of next month as part of the periodic quarterly meetings held between the Central Bank, the Federal Bank, and the Ministry of Treasury, where in these meetings we review all matters with emphasis and focus on the issue of regulating external transfer in a way that ensures the safety of the financial system, especially after the implementation of the new transfer system.” external environment, which requires a lot of coordination.
He stated that “these developments that have taken place are radical and not formal developments within the framework of reorganizing trade on sound foundations and organizing external transfer on sound foundations,” explaining that “the details related to this issue require coordination and joint cooperation between the Central Bank and those parties.”
He stressed that “the next meeting will be in the Emirati city of Dubai,” pointing out that “there are quarterly meetings in addition to emergency organizational meetings or communications via phone or video.”
Agreement to strengthen banks with dollars
He stated that “the Federal Bank agrees with the Central Bank on the necessity of them being removed from the process of conducting the executive aspects of the external transfer, and their role is limited to supervision and control, and this is normal in central banks that do not exercise these executive roles or detailed operations with regard to external transfer, and therefore the plan was The agreement between us is for the Central Bank of Iraq and the Federal Bank to exit these procedural processes, confirming the development of a plan to transfer the external transfer process from the electronic platform that will be completed at the beginning of next year.”
He pointed to creating a new relationship between Iraqi banks and internationally accredited correspondent banks abroad, where the process would be limited between them, and the role of the Central Bank of Iraq and the US Federal Reserve would be the process of monitoring and supervision, and we began some time ago trying to find a relationship between correspondent banks and our Iraqi banks.
Opened more than 40 bank accounts
He stated: “We have greatly succeeded in this context, and we were able to open more than 40 accounts for Iraqi banks with correspondent banks or abroad.”
Diversify currencies
He stated, “To increase flexibility and facilitation in the external transfer process, we have diversified the currencies in which transfers are made abroad, and we now have transfers in addition to the dollar, euro and UAE dirham.”
Understandings for making transfers through Turkish banks
He stressed that “the procedures have been completed for opening accounts in the dirham, the Chinese yuan, and the Indian rupee,” pointing out that “there are preliminary understandings with the Turkish side to make transfers through Turkish banks in the euro or the Turkish currency.”
He stated that “this issue is important and is being conducted in coordination with the Federal Bank and the US Treasury, and they are helping us in this,” noting that “this is the opposite of what some understand as an escape from the pressures of the Federal Bank regarding the dollar, as these currencies are covered by the dollar and we buy them from the dollars in the bank.” The Federal Bank, which is not far from the Federal Bank, but rather with the coordination and support of the Federal Bank, as it wants to reach with us the desired goal, which is to have a relationship between Iraqi banks and correspondent banks.”
He stated, “This is happening for the first time by opening this number of accounts for our banks, and it is a very important step to strengthen the banking system in Iraq, because accepting these banks means that they now have systems capable of being accepted internationally,” explaining that “any correspondent bank currently accepts… By opening an account with an Iraqi bank after ensuring that this bank has the necessary systems, standards, conditions and rules under which it operates.”
Completion of work on the electronic platform
Al-Alaq confirmed that “this will lead to the end of work on the electronic platform in the year 2024,” explaining: “We have reached an advanced level, and with the completion of the other episodes, we will leave this method.”
He stated, “In this case, operations will be faster, easier, and more disciplined, because these internationally accredited correspondent banks have complete systems for conducting audit and monitoring operations before implementing this operation.”
Processing rejected transfers gradually
Al-Alaq pointed out that “this will gradually reduce the percentage of rejected transfers,” pointing out that “rejection of transfers has reasons, but the banks and transferring persons will learn the conditions and points that must be taken into account when submitting a transfer request, as there are formal issues, for example, coding and numbering, and there are documents.” What is required and reviewed by the final beneficiary is that there be well-known companies, reasonable prices, etc., and over time the importer or applicant gets used to adapting or providing the requirements for the transfer.”
The fact that the American side reduced the amount of dollars
He stated, “The Federal Reserve and the US Treasury respond to all requests related to the process of providing and enhancing the dollar Iraq needs by following sound rules and standards for the movement of money,” explaining that “this serves the interest of both countries and rids the financial system of any suspicious operations such as money laundering and terrorist financing operations, so the money is What is available abroad is Iraqi money with no restrictions, but there are requirements and standards, whether in the dollar currency or even if it is in European currencies or other currencies, and these have become among the required rules in all circumstances.”
He continued, “Some people believe that if this money were in another country, it would be without restrictions, but these have become international standards followed, even if it was in euros, yuan, or pounds sterling, and there will be the same business rules.”
Expanding the diversification of foreign transactions for all Iraqi banks
He stated, “Our goal is that all banks must have correspondent banks, and we emphasized this issue years ago, as a bank that does not have correspondent banks cannot carry out its real work and is cut off from the world,” explaining that “some banks are late in this regard.” There were easy methods available, so some did not bother to work seriously on this issue, but now all banks have realized that there is a necessity, so they began to intervene successively.”
He continued: “All that provides the bank is the correspondent bank’s belief that it has the system required to control the movement of funds, provide conditions, and follow international standards, and the presence of a monitoring system on the issue of money laundering and terrorist financing will enter this field,” noting that “some banks have begun seeking the assistance of specialized international companies.” To organize these aspects until they become qualified.”
Importing various currencies comes into effect.
He pointed out that “import operations in various currencies have entered into force. For example, with the Chinese side and the euro, they were initiated some time ago, and the UAE dirham will begin next week.”
We aim to reduce the demand for the dollar
He stated, “These measures aim to reduce the pressure on the demand for the cash dollar, as we want all importers to carry out import operations through fundamental external transfer, but some trade in Iraq does not follow this path, but rather goes to put pressure on the dollar cash present in the market.” Therefore, the imbalance occurs in the price, that is, it results from the presence of groups that put pressure on cash while there are correct and fundamental procedures for transfer.” He announced work with the government to eliminate the episodes that put pressure on the cash exchange rate, and we found a group of categories, for example, some deal in dollars. Cash inside Iraq. The government issued a decision that it is not permissible to deal in the dollar locally. As for the second class, they are the merchants who import some materials and do not enter the platform or transfer in the proper manner. We began by analyzing these categories, such as the cigarette trade, which takes the dollar from the market by 100 percent, as we began. We analyze the materials that enter Iraq, such as some mobile phones and other materials. A decision was issued that these materials must have proof that they entered Iraq based on a formal external transfer. If these goods do not carry an official formal transfer, this means that they are goods that entered illegally.” .
Follow the market
He stated, “There will be follow-up operations in the market, and even in the warehouses, to ensure that these materials enter based on an official transfer so that we keep them away from pressure on the cash dollar market. We will expand this to other categories, and any category that we find is carrying out non-fundamental transfers or by paying… “Money, we will besiege it.”
Iraqi remittances in dollars
He pointed out that “the general principle is what was approved by the Council of Ministers that trading or payment inside Iraq is in dinars, but there are cases that are being studied at the present time, and there was a meeting in the Ministry of Planning regarding contracts in their various forms and how to pay possibilities, whether in dinars or dollars.” A set of proposals were put forward and we are now studying them,” noting that “some types of contracts or obligations with foreign companies previously will continue to be dealt with in dollars, and we are studying other cases to develop the best or most appropriate method for them.”
He pointed out that “in the past, inward transfers did not matter to the beneficiary if they were given in dinars, but now, because of the price difference, it is a temporary solution and we are working to solve the problem radically.”
The mechanism for private banks importing dollars
Al-Alaq announced the start of importing dollars into the country from the accounts of Iraqi banks abroad, explaining that “the supply of dollars from abroad comes from what is in the accounts of Iraqi banks abroad. For example, we have an account in a bank, so we can withdraw it in cash or a check, and it is transferred into cash, and it has interest on it.” The money should come internally instead of externally.”
He explained that the instructions of the Central Bank will not allow the bank to keep a large amount of foreign currency abroad, as there are certain percentages, in addition to preventing misuse of this currency coming into the country, and we have set rules for its use.
He warned that “the Central Bank is studying the request of the bank that supplies the dollar and its needs before giving approval and verifying the source of the amount and even the transporting company, in addition to verifying the uses of this amount.”
He pointed out that “because of the price difference, there was pressure on banks to withdraw their balances or transfers received from the dollar, which led to some banks becoming scarce in the currency,” explaining that “foreign currency can be available in more than one way, not only through the central bank.” We seek to deepen this practice.”
He stated: “As long as our Iraqi banks have balances abroad in foreign currencies, it is better for us to enter them, and this supports the reserves in the central bank, that is, instead of the bank using its foreign currency reserves, the currency will be available from the banks’ accounts, and this is an important point.”
A study to restructure banks in Iraq.
Al-Alaq confirmed that “there is a broad reform plan for private banks with mergers and correction operations in some of their situations, and there is a broad plan for government banks, some of whose details will be announced, and we are working with Prime Minister Muhammad Shiaa al-Sudani in this regard,” pointing out that “government banks It represents the greatest weight in the banking sector, and we must put it in the best possible way.”
almutalee.com
