Tag Archive | "Central Bank of Iraq (CBI)"

Budget Delay Hits KRG Banks


By John Lee.

The delay in adopting Iraq’s federal budget, in large part due to the dispute between Baghdad and the Kurdish Regional Government over oil exports and revenues, has reduced banking activity in the KRG by up to 25%, according to Adham Karim Darwesh.

Darwesh, the manager of the Erbil branch of the Central Bank of Iraq, was speaking to the Zawya news agency and explained the impact of the recent dispute:

“The delay in adopting the federal budget this year caused a 25% reduction in banking activities, as there was a three-month lag during which the market did not receive large sums of money, including wages of public servants in the governorate, which affected market transactions.”

Darwesh also pointed out how at least two banks, Rasheed Bank and Rafidain Bank had delayed opening branches in the region because of the recent delay in the $150 billion federal budget.

Standardization

Speaking of forthcoming plans for the banking sector, Darwesh said that their was a plan to unify banking standards across the whole of Iraq, to combat money laundering and corruption.

Several banks were not meeting Islamic finance standards and 5 banks have been threatened with closure over failing to build up capital reserves:

“There are many problems facing the banking sector, including the lack of new technologies in banking transactions and services, as well as the lack of qualified personnel who are up-to-date with the changing industry innovations and technologies.”

(Source: Zawya)

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Central Bank of Iraq Buys 36 Tonnes of Gold


By John Lee.

The Central Bank of Iraq has purchased 36 tonnes of gold valued at $1.6bn to help stabilise the Dinar against foreign currencies, Bloomberg reports.

Iraq is now the 43rd largest holder of gold reserves globally, having already held 29.8 tonnes as of August last year, but the latest purchase is one of the biggest by a central bank in recent years.

Turning a portion of oil revenues into gold reserves is one strategy recommended by the IMF for developing resource rich countries.

(Source: Bloomberg)

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Economists Divided Over Deletion Of Zeros


By Amina al-Dahabi for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The Central Bank of Iraq (CBI) has been attempting to delete three zeros from the Iraqi currency since 2003. This project has raised many concerns among the Iraqi public and within the business community, and Iraqi economists are divided. While some support the project and consider it a chance to decrease inflation and unemployment, others warn of economic shocks that may prevail over the Iraqi market as a result of the project’s implementation.

Following amendments made by the CBI, implementation of the project has been postponed several times. This is because of fears that are mostly related to the lack of security, the presence of a market open to foreign commodities without any restrictions, the prevalence of counterfeit money in the market and rampant corruption in the country.

The independent Iraqi News Agency (INA) quoted Abdul Hussein al-Yasiri, a member of the Iraqi parliamentary Finance Committee, as saying that 2014 will witness the deletion of zeros from the Iraqi currency. He noted that the deletion will occur in coordination with the CBI, and that as a result of the project, the number of banknotes in circulation will be reduced from 4 billion to 1 billion.

Haider al-Abadi, the head of the Iraqi parliamentary Finance Committee, told Al-Monitor that while deleting zeros from the current currency is possible, this has been postponed until after parliamentary elections. He noted that studies are being carried out to ensure that, following the currency change, counterfeiting is limited and that Iraqis don’t go back to trading in the old currency.

The step to delete zeros from the currency has been postponed several times, leading the parliamentary Economic Committee to demand that the CBI accelerate this project, as Al-Sharqiya reported. In a news conference held July 6, the Economic Committee confirmed that the deletion of zeros will lead to an increase in the value of the Iraqi dinar and will have positive repercussions, including a reduction in unemployment and poverty rates in the country.

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Zaha Hadid Ponders Return to Baghdad


By John Lee.

The Iraqi-born architect Zaha Hadid has said that her work on a new Central Bank of Iraq headquarters is progressing. She was asked to build the new bank after a 2010 suicide attack on the existing building.

But will she return to Iraq for the first time since 1980?

She told Bloomberg:

“I would like to go … It’s very difficult emotionally for me, because I have no family there anymore. The last time I was there, my parents were alive; they were there.

“Also, I cannot go for just three days … The few people left I might know, I would like to see — my aunt and uncles are in the north.

(Source: Bloomberg)

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Dinar Exchange Rate Linked to Oil Exports, Federal Reserves


By Omar al-Shaher for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

According to an Iraqi financial expert, the value of Iraq’s federal reserves currently amounts to about $80 billion, following the recent increase in the country’s oil exports. Nevertheless, no information was made available by the Central Bank of Iraq (CBI) to this effect.

Speaking to Al-Monitor, Iraqi financial expert Hussein al-Asadi said, “According to my information, the value of Iraq’s federal reserves currently amounts to about $80 billion. This includes funds, precious metals and other items.”

Nevertheless, the spokesman for the CBI, which is charged with managing the federal reserves of Iraq, has yet to issue a statement in this regard. Meanwhile, Al-Monitor’s correspondent in Baghdad failed to obtain comment from the bank’s governor, Abdul Basit Turki, to this effect, or determine the identity of those authorized to speak to the media. The bank has only issued statements to comment on the developments of its work.

The last comment made by the CBI regarding the country’s federal reserves dates back to Jan. 31, 2012, when the bank denied the “decline of gold reserves.” The CBI stated, “They have been stable throughout the past months and amount to 29,730 tons.”

Asadi added, “The US dollar is the main currency in the Iraqi reserves. There are also some reserves in other currencies, in addition to gold. … Due to the troubled military and political conditions of the country, Iraq’s reserves cannot be invested to a large extent, as is the case in China or the United Arab Emirates, for instance.”

“Iraq is distributing its reserves to a number of banks just to protect [these funds], although it does generate some interest on the deposits,” Asadi added.

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APRIL FOOL: New Iraqi Dinar to Change World Banking


By Marc Snaid.

The Central Bank of Iraq (CBI) has announced that the introduction of the new Iraqi currency has been further delayed due to teething problems with the cutting-edge technology that it will employ.

Radical new functionality including fingerprint recognition and near-field communication (NFC) promises to create a world-leading new monetary system, which will be the envy of governments around the world.

Several years of collaboration between the CBI, the World Bank, and Goldman Sachs, has made it possible to create a database to track the location and ownership of each dinar note, making the monitoring of transactions much easier.

Professor John Frink, of Springfield Heights Institute of Technology, who worked on the program, explained:

Each note already has its own serial number, so it is a simple matter to set up a database to record the location and movement of each note.

“Near-field communication, which is already used in contact-less credit and debit cards, allows the notes to communicate with your mobile phone [cellphone] and relay information to our computers.

“Touch-sensitive paper can even record the user’s fingerprint, for additional peace of mind.

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