Today, Friday, Ali Al-Alaq, Governor of the Central Bank of Iraq, announced the beginning of supplying the dollar into the country through the accounts of Iraqi banks abroad, and while he indicated the end of procedures to open accounts in the UAE dirham and the agreement with Turkey to make transfers in the euro or Turkish currency, he revealed a broad plan to reform and develop private and government banks.
Consultation with the US Treasury and the Federal Reserve
“The Central Bank of Iraq is in constant communication with the US Treasury Department and with the US Federal Bank,” Al-Alaq remarked in an interview with the official news agency, followed by Al-Mutla’, emphasizing that “this communication continues permanently, and there are no interruptions.”
He went on to say, “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 necessitates a great deal of cooperation.
He remarked 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,” adding that “the details related to this issue require coordination and cooperation.”
He went on to say that “the next meeting will be in the Emirati city of Dubai,” as well as that “there are quarterly meetings in addition to emergency organizational meetings or communications via phone or video.”
Dollar agreement to strengthen banks
“The Federal Bank agrees with the Central Bank on the necessity of removing them 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 thus the plan was developed,” he said. The Central Bank of Iraq and the Federal Bank have agreed to leave these procedural steps, affirming the construction of a plan to transfer the external transfer process from the electronic platform, which will be completed at the beginning of next year.”
He mentioned establishing a new relationship between Iraqi banks and internationally accredited correspondent banks abroad, with the role of the Central Bank of Iraq and the US Federal Reserve limited to monitoring and supervision, and we started looking for a relationship between correspondent banks and our Iraqi banks some time ago.
I’ve opened over 40 bank accounts.
He went on to say: “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.”
“To increase flexibility and ease in the external transfer process, we have diversified the currencies in which transfers are made abroad, and we now have,” he said.
Agreements for transferring funds through Turkish banks
He went on to say that “the procedures have been completed for opening accounts in the dirham, the Chinese yuan, and the Indian rupee,” in addition to the fact that “there are preliminary understandings with the Turkish side to make transfers through Turkish banks in the euro or the Turkish currency.”
He went on to say 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,” and he added 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 Reserve Bank, which
“This is happening for the first time by opening this number of accounts for our banks,” he said, adding, “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,” adding that “any correspondent bank currently accepts… By creating an account with an Iraqi bank after confirming that it has the essential procedures, standards, conditions, and laws in place.”
Work on the electronic platform has been completed.
Al-Alaq went on to say that “this will lead to the end of work on the electronic platform in the year 2024,” adding, “We have reached an advanced level, and with the completion of the other episodes, we will leave this method.”
He went on to say, “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.”
Gradually processing rejected transfers
Al-Alaq went on to say that “this will gradually reduce the percentage of rejected transfers,” as he pointed 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.” The ultimate beneficiary requires and reviews well-known firms, affordable rates, and so on, and over time the importer or application becomes accustomed to modifying or offering
The fact that the American side cut the dollar amount
“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,” he said, adding that “this serves the interests of both countries and rids the financial system of any suspicious operations, such as money laundering and terrorist financing operations, so the money is not lost.” What is available overseas is Iraqi money with no limits, but there are regulations and standards, whether in dollars or European or other currencies, and they have been among the needed norms in all scenarios.”
He goes on to say: “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 reform Iraqi banks.
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,” emphasizing that “government banks are under pressure.” It carries the most weight.