SumeriaNews – Economy

Make upAnnouncementCentral BankIraqiOn September 4, 2024, on the termination of work on the electronic platform for monitoringMovement DollarThe transfers of the American currency abroad, early next year, are a turning point in Iraqi financial policies.

This decision is expected to lead to fundamental changes in financial transfer mechanisms, and a direct impact on exchange rates and financial stability. Moreover, this decision poses new challenges for the banking sector, and calls for a careful assessment of its effects and the fate of banks that will not be able to integrate into the new system, and the challenges that the government may face in implementing this transformation, according to observers.

The expert in economic and financial affairs, Safwan Qusai, confirms that the new transfer mechanism that will be implemented early next year will not negatively affect the financing of legitimate trade.

He says that the entry of the central bankIraqiThe US Federal Fed as a monitor, and the transfer of Iraqi banks that have relations with major international banks such as Citibank and JP Morgan, will contribute to accelerating transfers and reduce data manipulation.

Elimination of the parallel market
He adds that this step will eliminate illegal trade that depends on buyingDollarFrom unofficial sources or what is known as the parallel market.

He points out that banks facing restrictions on dealing in foreign currencies are currently being evaluated by Oliver Weyman, with the aim of developing their capabilities in the field of remittances, expecting that many of these banks will be able to resume their international work after meeting the required requirements.

The economist stressed that the new mechanism will ensure the provision ofDollarAt a fixed official price, which removes any concerns about financing illegal trade, noting that the parallel market will continue to face challenges due to tight regulatory measures.

Qusai called on irregular traders to move to deal through official channels, stressing that there is a possibility of merging some Iraqi banks to form a new banking entity capable of exercising international trade freely, in coordination with the Central BankIraqiThe American Federal.

In early 2023, he announced IraqAdopting an electronic platform forMonitoring MovementSellingDollarMoney laundering operations, following warnings issued by the US central bank, and following the US Treasury Department punishing many local banks for their “involvement” in suspicious acts.

Expectations of an exchange rate increase
For his part, economist Nabil Jabbar Al-Tamimi warned that the transition to a new mechanism for bank transfers inIraqMay lead to a temporary rise in the exchange rateDollarduring the coming period.

The Council of Ministers ratifiedIraqiOn February 7, 2023, on the decision of the Board of Directors of the Central BankIraqiAdjusting the exchange rateDollarAgainst the dinar, as follows:

1300 dinars per dollar the purchase price from the Ministry of Finance.
1310 dinars per dollar the selling price of banks.
1320 dinars per dollar the sale price by banks and non-banking financial institutions of the final beneficiary.

Al-Tamimi explained that the Central BankIraqiIt works to end the adoption of the current platform for remittances, and move to a system based on direct relations between Iraqi banks and international banks.

He pointed out that some Iraqi banks are ready to work with this new system, but other banks need to develop their capabilities, and expected this shift to lead to some market disruptions during the transitional period, but stressed that the government is working to support banks to successfully overcome this stage.

Al-Tamimi explained that the Iraqi government, represented by the Central Bank, plans to evaluate all Iraqi banks and qualify them to work with the new system, in cooperation with international financial audit companies, stressing that these steps aim to enhance the stability of the banking system.IraqiAnd increase its efficiency, which will reflect positively on the economyIraqiIn general.

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