Central Bank Policy In Light Of Banking Compliance With International Standards Between The Controversy Of Expectations And Requirements

Dr. Haitham Hamid Mutlaq Al Mansour

The debate is raging about the steps taken by the Central Bank of Iraq towards the US Federal Reserve and the US Treasury, and doubts are raised that they are incorrect steps in managing monetary policy.

Other opinions even went so far as to warn of a banking collapse as a result of these agreements and what will result from them at the beginning of next year in terms of the connection of Iraqi/Arab banks with correspondent American banks. These opinions described it as confusion and error in following monetary policies that are not appropriate for the current economic situation.

Therefore, we say in this regard and warn against the incorrectness of these opinions if we take them in good faith, as the aforementioned steps and procedures are nothing but a reflection of the Central Bank's policy to support the national economy in its orientation towards establishing relations with Arab and international correspondent banks and the gradual transition to operations to enhance the advance balance of the accounts of these banks.

This is consistent with what the Central Bank of Iraq announced in 2023 in its plan to gradually reduce reliance on the electronic platform until it ends its work during 2024 and limit it to the operations of recording financial transfers for the purposes of control, auditing and analysis.

The Governor of the Central Bank has confirmed in many places that the Central Bank is determined to support Iraqi banks, enhance their capabilities and prepare them to work in accordance with international practices and agreements that aim to build and enhance the capabilities of our banks internationally.

The monetary policy measures to link the six Iraqi and Arab banks with prestigious, capable and capable international banks is exactly right and consistent with the reality of international activity and practice in import operations, currency transfer and money movement through prestigious international banks. This is because the implementation of this measure is expected to contribute to the following:

Controlling money transfer operations and identifying the final destinations to which they will reach, and thus it will be a control joint in the pre-transfer stage instead of the post-control joint.

The aforementioned linkage supports a number of our qualified banks towards raising their banking status and increasing their acceptance and global penetration, especially since most Iraqi banks suffer from administrative and organizational problems at the operational and investment levels.

Reducing the number of banks that are on the blacklists that practice informal activities that revolve around smuggling or selling dollars at the parallel price, at the expense of practicing banking activity within the limits of lending and investment. And encouraging them to rebuild their activities within the limits of real banking work.

Based on the achievement of the above points and in light of the improvement in the international position of Iraqi banks after they adopted the policy of linkage and compliance and the resulting control and reduction of dollar smuggling and money laundering operations, it is expected to be the nucleus for attracting new financial investments that can work on the development paths of leading economic sectors, and stability will be generated in the cycle of demand for the dollar and from it, stability of price levels on the medium or long-term level.

There will inevitably be a price gap that will raise inflation levels, but it will soon disappear, provided that the procedures for linking and international transfer are scientifically implemented within the terms and instructions of compliance with international standards and the necessity of achieving the above points.

Therefore, in this context, we propose several requirements to raise the ability of Iraqi banks to adhere to compliance standards, stimulate their relations with correspondent banks, and enhance confidence in their performance, including:

Adherence to modern international compliance laws and legislations issued by international regulatory institutions and authorities, including the Basel Committee and the Financial Action Task Force (FATF), which issued its forty recommendations to combat money laundering and terrorist financing.

In addition, the US decisions and laws issued by the Treasury Department represent basic conditions for compliance and constitute an ongoing state for the banking sector in the world, not just the Iraqi and Arab banking sector.

Our banks must invest in the necessary infrastructure for mega development projects such as the Development Road, and apply advanced technology that supports reaching international compliance levels.

Supporting everything that leads to deepening the effective contribution of our banks to development through issuing legal facilities and financial facilitation to support the cycle of banking capital towards foreign trade, industry and investment.

The principle of transparency in banking operations and financial reporting must be adopted to build sustainable trust with the international community, and a comprehensive national plan must be prepared to develop capabilities, training and qualification in the field of banking compliance by establishing a specialized administrative unit for this purpose.

Therefore, this linkage step is a strategic step for the monetary policy of the Central Bank of Iraq, as the size of the Iraqi banking sector’s deposits exceeds $100 billion, which is an incentive to activate the work of banks.

 In the same context, if we know that Iraq imports $70 billion worth of money, it would be more economically feasible to cover this money through a solid banking sector that opens credits and is linked to the global financial system and international institutions with efficiency and transparency.

It is concluded from the above and according to the importance of the linkage and compliance step, that the private sector must be ready to start developing and financing the national economy and achieving the desired growth. Especially after the American bank (JP Morgan) recently expressed its readiness to support Iraqi trade financing operations, which is the largest in size and solidity among global banks, and has a major role in correspondence operations between banks worldwide.

290 views   12/23/2024 - https://economy-news.net/content.php?id=51190

The Central Bank Sets New Conditions For Buying And Selling Foreign Currencies

Monday 23 December 2024 21:05 | Economic Number of readings: 57  Baghdad/ NINA /The Central Bank of Iraq set new conditions for buying and selling foreign currencies today, Monday.  https://ninanews.com/Website/News/Details?key=1176343

Globally.. Gold Prices Rise After The Dollar Declines

Time: 2024/12/23 09:20:40 Read: 1,729 times  {Economic: Al Furat News} Gold rose in spot transactions on Monday, after the dollar fell and because of the Federal Reserve’s cautious stance on cutting interest rates next year.

Spot gold rose 0.2 percent to $2,626.44 per ounce by 0313 GMT. U.S. gold futures fell 0.1 percent to $2,642.10.

The US Federal Reserve's 25 basis point interest rate cut on December 18, its dovish economic outlook note and its expectation of smaller cuts in 2025 pushed gold to its lowest since November 18 last week.

Gold rose on Friday as the US dollar and US Treasury yields fell when US economic data pointed to slowing inflation.

Spot silver rose 0.7 percent to $29.72 an ounce, platinum rose 1 percent to $935.47 and palladium added 0.2 percent to $922.31.  LINK

Central Bank's Harvest In 2024 And Its Strategic Axes In 2025

Samir Al-Nusairi  As the year 2024 draws to a close, it is clear beyond doubt that the Central Bank’s measures and efforts since the beginning of 2023 until now, with the support and cooperation of the government, have borne fruit and are beginning to yield positive results according to what was planned.

This is what was explained in detailed procedures and administrative, technical and negotiating steps with the US Federal Reserve and the US Treasury Department and understandings to regulate foreign trade financing with Arab and international banks by approving the opening of accounts for Iraqi banks in American, Chinese, European, Emirati, Indian and Turkish correspondent banks to deal directly with them for foreign transfers in the currencies of these countries, which are the dollar, euro, Chinese yuan, Indian rupee, Emirati dirham, Turkish lira, Jordanian dinar and Saudi riyal,

and leaving the electronic platform in 2024 and allowing banks to supply dollars and foreign currencies into Iraq from their accounts with correspondent banks or abroad according to specific controls issued by the Central Bank, as well as reaching the opening of about 40 accounts for our banks in correspondent banks.

The Central Bank's strategy implemented in 2024 to reform the banking sector depends on restructuring, developing and classifying banks and increasing their capital to the ceiling set by the Central Bank according to the specified timeframes.

This will lead to raising the capabilities of our banks to provide the best banking products and services to customers, the economy, investment and development, and moving towards comprehensive digital transformation and compliance with international standards, and helps lift the restrictions imposed on our banks.

Therefore, it can be said that one of the most prominent achievements in the banking reform process in 2024 is that 97% of foreign transfers are made at the official exchange rate, and work is underway to facilitate foreign transfers for small traders and to identify speculators' plans to harm the Iraqi economy.

An annual inflation rate of 3.7% has also been maintained, while controlling the general price level and maintaining a foreign exchange reserve and 153 tons of gold at a rate of 140% to cover imports and local currency in circulation and provide the necessary liquidity to meet the needs of the Ministry of Finance to implement the government's operating budget.

In addition to the developmental measures for the technical, technological and administrative infrastructure of the Central Bank. This confirms that the Central Bank is accurately and comprehensively implementing its banking reform strategy in all its axes.

 It is an embodiment of what it has specified in the roadmap that it clarified in cooperation with the government according to what is stated in the government program in Axis 12 (Financial and Banking Reform) and Paragraph 7 thereof, which is concerned with developing and enabling banks to contribute to development and investment.

Here we can summarize the Central Bank’s plan in 2025 to complete its procedures, which it will work to implement with great precision, as follows:

Firstly, one of the Central Bank’s priorities is to achieve a stable financial system that is accompanied by electronic financial systems.

Second: Commitment to establishing the rules of compliance, risk management, transparency and integrity of financial operations.

Third: The transition from a cash economy to a digital economy and the accompanying cooperation and coordination measures have achieved a qualitative shift between the Iraqi government and the Central Bank of Iraq.

Fourth: Implementing the Central Bank’s plan for financial and banking reform by continuing cooperation with international consulting and auditing companies that are characterised by compliance with international standards that keep pace with global developments in the field of the financial digital economy.

Fifth: Working to strengthen international relations, including expanding the establishment of a network of relations with foreign correspondent banks and helping our banks to apply the standard criteria required of correspondent banks.

Sixth: Establishing the Riyada Bank and redirecting work in initiatives to finance small and medium enterprises according to new standards, and banks contribute to its capital and management, in line with the initiative of the Prime Minister (Riyada).

Seventh: Launching a financial inclusion strategy and putting it into effect in coordination with relevant authorities. Eighth: Implementing what is stated in the national strategy for bank lending by relying on the financial capabilities of banks and other entities in cooperation with GIZ in attracting and investing deposits and in providing the best banking products to customers and contributing to sustainable development.  Views 292  12/23/2024 - https://economy-news.net/content.php?id=51187

Head Of The Security Committee In Nineveh: The Iraqi Border With Syria Is Fully Secured

Buratha News Agency1052024-12-23   The head of the security committee in Nineveh Governorate, Abdul Qader Al-Dakhil, confirmed that the Iraqi border with Syria is fully secured thanks to the precautionary measures and the strengthening of security measures.

Al-Dakhil said in a press statement that "the borders with the Syrian side in Nineveh are completely secure thanks to the great cooperation between the citizens and the security forces, stressing that Nineveh is 100 percent safe."   https://burathanews.com/arabic/news/454214

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