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TNT:

Tishwash:  Association of Private Banks: The Central Bank works to revitalize the economy after changing the exchange rate of the dinar

The Iraqi Private Banks Association announced that the decision to change the exchange rate of the dinar against the dollar, taken by the government, is part of reform packages for the economy, which is going through a stifling financial crisis due to its dependence on oil and disruption of other productive sectors.

The association said in a press release seen by "Al-Eqtisad News", that the Iraqi Private Banks Association supports the monetary policy measures taken by the Central Bank, aimed at revitalizing the economy through the lending initiative represented by 5 trillion dinars to support large industrial, agricultural and real estate projects in addition to the 1 trillion dinars initiative To support small and medium industrial and agricultural projects

Which will contribute to supporting the local product and creating factories that can attract the unemployed, as well as his recently announced 3 trillion dinars initiative to support the residential sector, which will include non-employees in the public sector.

The Association of Private Banks confirmed that the economy has reached a very difficult stage, represented by the erosion of oil revenues, and its spending on salaries in addition to the government borrowing huge sums of money to support the operating budget, without creating real economic development, and the country’s dependence of a very large percentage on imports, which required taking important measures.

 To support the Iraqi productive sectors to confront the commodity dumping carried out by some countries, especially since the economy has become unable to attract people who are able to work in its public and private sectors   link

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Cutebwoy: Iraqi banks undertake overdue reforms

Dec 28, 2020

The Central Bank of Iraq announced in a statement Dec. 19 the devaluation of the Iraqi dinar to 1,450 to help reduce the country’s fiscal deficit in the state budget for 2021 from 70 trillion to nearly 30 trillion dinars.

Simultaneously, Iraqi banks have undertaken additional measures to optimize the Iraqi economy. In the past weeks, government banks intensified calls for citizens to deposit their money in their bank branches instead of hoarding it at home.

Local media published calls by Rasheed Bank and Rafidain Bank along with the interest rates they pay for deposited money.

In less than a week, state-owned Rafidain Bank raised the interest rate on deposited money from 4% to 5% so as to encourage people to deposit funds in Iraqi branches.

Rasheed Bank, however, is paying a 7% interest rate on fixed deposits for 2.5 years. Rasheed Bank's offer involves individuals, businesses, associations and other sectors. According to the Central Bank, funds citizens have hoarded at home are estimated at 77% of those circulating in the local market.

Rasheed Bank, established in 1988, and Rafidain Bank, which opened in 1942, are the largest government banks in Iraq and have branches in most of the 18 Iraqi governorates.

The two banks, among others, have faced financial pressure due to government borrowing as a means to meet the large financial deficit the country has suffered since the outbreak of the COVID-19 pandemic and the drop in oil prices, which is Iraq’s main source of revenue.

Rasheed Bank spokesperson Amal Shuwaili told Al-Monitor, “Our bank is trying to raise awareness among citizens about the importance of depositing money in banks.”

Shuwaili does not have stats on deposits after the call was made, but she pointed out that the bank is increasingly opening new accounts and more and more funds are being deposited.

She explained that “the interest rates are withdrawn on a monthly, not a yearly basis" and "the funds will be protected at all times.”

The Iraqi banking system is underdeveloped, as Iraqis still pay most of their daily financial transactions in cash.

Salary domiciliation for ministry and state institution employees started a few years ago; banks provided them with debit cards, enabling them to withdraw cash.

Shuwaili stated that “as soon as the salary is deposited in the account, the bank sends an SMS notifying the employer that the salary has been deposited in the account.”

Amer Abd Ali, an employee at the Interior Ministry, noted that he only believes in cash and withdraws his entire salary as soon as it enters the account.

He explained to Al-Monitor, “I can only use the card in specific places. … To be honest, I do not trust the banks with my money.”

Citizens' lack of trust in banks is the main reason behind hoarding money, but it is not the only reason.

Bureaucracy prevails over the banking system, especially government banks, when it comes to opening new accounts and depositing funds. Add to that the interest rate depositors receive.

Shuwaili affirmed that, on the contrary, "… We have started to reduce this bureaucracy, and things have become easier now." Depositing funds "has become an easy task … but money withdrawal may seem a complicated process for clients. This process is designed to protect the money. Is it a kind of bureaucracy to ask for the client’s ID?” she added.

Shuwaili attributed Rasheed Bank's call to its ambitious plan to increase loans and encourage investments. “That is why Rasheed Bank is encouraging clients to deposit their hoarded funds.”

Shuwaili's remarks did not seem to be in line with the international data on the Iraqi government banks’ participation in boosting investments and the economy.

According to the World Bank, only 5% of small- and medium-sized enterprises obtained loans from local Iraqi banks, while businessmen and investors borrowed from family and friends to bridge their financial deficits or expand their businesses.

Iraq was ranked 172 out of 190 in the World Bank's Ease of Doing Business Index, followed by poor countries devastated by war, such as Syria and Afghanistan.

Nabil al-Marsoumi, professor of economics at the University of Basra, said that "the banks’ calls on citizens does not seem more than a prelude to a new round of government borrowing from these banks."

Marsoumi, who has written research papers on the defects of the Iraqi economy, identified major defects in the banking system including bureaucracy, underdeveloped e-systems and the fear that these banks could collapse at any moment due to the stifling financial crisis that Iraq is going through. He indicated to Al-Monitor, however, that “Iraqis deposit their money in neighboring countries due to the interest rates — in Turkey and Iran, for example, which are higher than those in the Iraqi banks."

Annual interest rates in Turkish and Iranian banks hit 20% on fixed deposits.

Read more: https://www.al-monitor.com/pulse/originals/2020/12/iraq-banks-economy-reform.html#ixzz6hy8rsCXa

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 Courtesy of Dinar Guru

MilitiaMan  I am sure everyone by now can see the postponements are intentional. They clearly have a goal, a purpose and it is on purpose imo. They are holding their cards (exchange rate) close to the chest as long as they possibly can. It is clear...They are going to update the exchange rate before the end of the year. One can say, well they did already from 1190 - 1460 and one can say they are to do it again based off todays articles from 1460 - 1660. ...Hindsight shows they did tell us though one way or another that they are or were  going to devalue the currency and also revalue it. 

Pimpy  Article:   "An advisor in the central bank determines its orientations regarding the exchange rate and the possibility of changing it again"  ...technically what they said [before] was they would only devalue the dinar one time not change the rate...I thought this devaluing of the dinar was only a short-term thing.  It just didn't make sense to me especially since they had so much building to do and how it disproportionately affected the poor.  So now it looks like there's already going to be pressure on them to go ahead and decrease the rate so the value goes back up for dinar holders...

Monday Night MarkZ Update

Stimulus update 12/28/2020 with MarkZ

https://www.youtube.com/watch?v=XvKwq-fh-nQ

Lynette Zang: 

Fed Admits Banks are Weakening (Financial Stability Report)

Dec 18, 2020

https://youtu.be/d2ZklM9N06s?t=1

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