The US Federal Reserve imposes amendments to the mechanism of work of the Central Bank of Iraq to restore confidence
The US Federal Reserve imposes amendments to the mechanism of work of the Central Bank of Iraq to restore confidence
12-28-2022
Researcher Shatha Khalil
The process of selling foreign currency “dollars” took about 18 years, or what is called by the Central Bank of Iraq “currency auction” under which the dissolved coalition authority that was running Iraq, as a representative of the international coalition after 2003, allowed the initiative to sell the US dollar – hard currency Which Iraq gets from selling oil – i.e. the country’s wealth, freely and without real restrictions or controls, which opened the largest window for financial corruption, waste and smuggling of currency, and since the Iraqi dinar is linked to the US dollar, the US Federal Reserve has the right to follow up on suspicious activities that destroy the currency.
The financial crisis that Iraq is going through, outweighs the capabilities of the Central Bank and the tools available to it to address and surround it, and talk about restoring confidence between the US Federal Reserve and the Iraqi Central Bank, means that the required measures must be firm and radical to impose effective control over banks and currency transfer mechanisms abroad, and dismantle systems Corruption and holding those behind it accountable, which are powerful forces that the government cannot eradicate.
Where the Federal Bank revealed, through its procedures, where the money goes, and some of it was
• After taking a dollar from the Iraqi market, it turns into other currencies and reaches the authority of Oman, then disappears. After investigations, it turns out that it goes to Iran.
• Smuggling through the outlets of the Kurdistan Region, in cars to Turkey.
• Some banks and their owners affiliated with some of the parties that control the depletion and smuggling of currency, where they were completely controlled, and the evidence that became clear of the success of these measures is the collapse of the Iranian Toman and the Turkish lira.
The actions taken by the US Federal Reserve Bank are amendments to the transfers that pass through the Swift system, which includes an audit of the source of funds until the final future, which came after the consequences of theft of the century, which revealed schemes to smuggle money. The US Federal Bank and the Treasury Department were monitoring the situation, as it sent Warnings and alerts to the Central Bank of Iraq, but taking the last firm measures may have political dimensions to put pressure on the Iraqi government, on the one hand, and on the other hand, there are influential parties linked to banks and currency smuggling networks and circumventing local and international controls in the monetary field, to resist any serious measures against Corruption, its channels and networks.
There is no doubt that the negative effects of this auction began to appear in the abnormal circumstances that the country is going through, such as the disruption of many laws that would control the political, security, social and economic joints of countries in a clear and explicit manner. When the environment is not suitable, the results are counterproductive. Completely.
The Iraqi economy suffers from successive crises, and exaggerations in the process of purchasing the dollar and transgressions by smuggling it out of Iraq or transferring it to suspicious parties, and the daily sale rate sometimes reached about 250 million dollars, all these large numbers and financial chaos, and the monopoly of some banks and the private buying and selling process In dollars, the Iraqi government and then the central bank has made it subject to great pressure from the US Federal Bank and international organizations, to change the mechanism of selling dollars, especially import and export amounts, and make them compatible with financial and banking developments in the world.
Some controls and conditions have been put in place to avoid serious mistakes that occur in this important sector, and conditions that should be presented by people to authorized banks to buy dollars.
The new audit method violated the previous procedures that Iraq had been working on for years, so the audit was taking place in the Central Bank of Iraq and before it in the banks, then the data is sent to the Federal Bank and then the amount is transferred to the correspondent bank, while the audit is currently taking place in three stages and without relationship Between them, as it takes place in the Iraqi banks, then the Central Bank, then it takes place in the Federal Bank, and then in the Correspondent Bank, where the amount goes to the last beneficiary.
The US Federal Bank has put in place a series of strict procedures recently, obligating us to display lists of the dollars sold on it, including the names of the persons and beneficiaries, and a 15-day wait for the statement of the Federal Bank’s position on the integrity of the purchase process for the party submitting the request, indicating that the sale process will stop if the bank objects. The Federal Reserve on a specific name because it is wanted, or there is similarity of names, or there is suspicion of the purpose of purchasing the dollar.
The Federal Bank is currently in the process of adding three supervisory authorities to dollar sales to check its destination after the sale, to prevent it from reaching terrorist or prohibited parties, and because of these conditions and limitations, the central bank cannot provide the dollar to all those who request it, for the sake of the country’s economy interest and preserving the currency from loss and smuggling He must adhere to applying these standards to prevent a decision to stop the flow of dollars to Iraq because it will cause a disaster, and the sale of dollars in Iraq is subject to strict supervision by the US Federal Bank because it is the issuer of dollars. These measures came due to the loss of confidence and control in the Central Bank of Iraq, which caused the boom The parallel exchange market to create a black market that benefits individuals who control prices, while not interfering with preventing such practices, and this is an important point.
At this difficult stage, Iraq faces a great challenge on all economic, political and social levels. The internal mafias that do not accept an organized Iraqi economy because they feed on chaos prevent in various ways submission to the law and adherence to controls, which puts great pressure on the government and puts it in front of a challenge. Kabir in redrawing the Iraqi economy to control the dollar.
The Iraqi Prime Minister, Muhammad Shia al-Sudani, indicated his support for these measures to preserve the interests of the Iraqi people, and that the measures that the Central Bank of Iraq followed, under pressure from the Federal Bank, should have taken place gradually, because it confuses the markets, especially with the presence of unofficial outlets for obtaining dollars that contributed to the existence of This chaos in the Iraqi economy, and the government is proceeding in the direction of supporting domestic production and controlling consumption through the rehabilitation of the financial system under the supervision of the US Treasury.
In conclusion, the government must pay attention to them in order to avoid them in the next stage, and the government must prioritize by taking serious steps to replace chaos with order, and control the policy of dumping the market, with the contribution of all sectors, all ministries, merchants, and officials, and educating the citizen about the steps that are the responsibility of everyone to restore stability at the present time, And then proceeding towards development and development, and the most important thing is to discover alternative mechanisms for financing trade in order to facilitate it, and to develop the tools necessary to manage cash liquidity for the stability of the country.
Economic Studies Unit / North America Office Rawabet
Center for Research and Strategic Studies
rawabetcenter.com
