Sudanese financial advisor: Iraq’s financial deposits are preserved in the ‘US’ Federal Reserve Bank
Sudanese financial advisor: Iraq’s financial deposits are preserved in the ‘US’ Federal Reserve Bank
AM:11:26:13/03/2023
Today, Monday, the financial advisor to the Prime Minister, Mazhar Muhammad Salih, confirmed that Iraq’s financial deposits are with the Federal Reserve Bank (the American Bank), pointing out that Iraq does not have financial deposits with the American Silicon Valley Bank.
Saleh said in a press statement, followed by NRT Arabia, that “the issue of the collapse of the Bank (Silicon Valley) in America is due to two main reasons. Debts or loans at a rate that exceeds the safe barrier that equity should be formed, which is a high risk indicator.
He added, “These debts consist of securities whose value decreased with the rise in US interest, at a time when safety indicators began to show that the bank also needed additional capital to support its potential losses, which means that there is an accelerated capital depletion resulting from a loss, as well as a cessation of Its investments in a portfolio of financial assets that it manages for its own benefit to achieve its profits, which made the capital adequacy ratio more than 16 percent instead of the required minimum of 10.5 percent, which is the ratio of regulatory capital to risk-weighted assets, which means that the bank is looking for liquidity without investing to face liquidity risks or risk of bankruptcy.
Saleh pointed out, “The bank has been paying high interest on short-term deposits due to the strict monetary policy of the US Federal Reserve Bank, which today approached 5 percent, while the bank’s portfolio is mostly from remittances and US treasury bonds, with periods ranging from one year to 30 years.” Indicating that “investing in them has become very losing, as the value of financial investments as assets or assets depletes with the rise in interest rates, in addition to deducting them at high rates in order to liquidate them to face the withdrawals of losing technological companies that resorted to withdrawing their current deposits with the Silicon Valley Bank itself to face its financial hardship due to Inflationary depression in the American economy.
And he explained, “This matter led the bank to conduct discount operations with high rates of discount or loss for its portfolio of government bond assets, and the reason for accelerating the discount is to provide sufficient liquidity to confront the public or companies withdrawing their deposits from the bank within a state called: (traditional bank panic), Noting that “the Silicon Valley Bank has no choice but to deduct more transfers and liquidate them at a loss, and this has increased the cases of bond discounting syndrome at a loss on the one hand, in exchange for the continuous withdrawal of deposits by depositors on the other hand.”
Saleh stated, “The United States Banking Supervision Authority placed guardianship over the aforementioned bank, which declared bankruptcy, in addition to the Federal Deposit Insurance Authority taking measures to protect the deposits of small depositors for ceilings that are said to not exceed 250,000 dollars at least.”
And regarding the risks of the impact of the bankruptcy of the US bank on Iraq, he indicated that “Iraq does not have deposits in the aforementioned bank,” noting that “Iraq’s sovereign dollar deposits are deposited with the Federal Reserve Bank (the US bank).”
And Saleh added, “Iraqi deposits are carefully invested within a tight short-term investment portfolio by the Central Bank of Iraq and according to standard investment evidence that avoids various risks.”
nrttv.com
