Economist: Sanctions lead to panic among investors and capital

by **wciappetta** Sun 12 Jan 2020, 10:03 am

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Economist: Sanctions lead to panic among investors and capital

by wciappetta Sun 12 Jan 2020, 10:03 am

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[ltr][rtl]2020/01/12 14:07[/rtl][/ltr]
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[rtl] 86[/rtl][/ltr]
[ltr]Section:
[rtl] Iraq[/rtl][/ltr]
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[ltr]Economist: Sanctions lead to panic among investors and capital [/ltr]

[ltr]Baghdad: Economist Abdul Rahman al-Mashhadani revealed sunday,January 12, 2020, what he described as a serious strategic mistake by the Central Bank of Iraq, which will lead to the holding of half of the bank's reserves if the United States decides to impose sanctions on the country.[/ltr]

[ltr]"If the United States blocks Iraq's access to the central bank's funds, which it holds at the Federal Reserve Bank in New York, it is illegal, because central banks are supposed to have their funds protected by international treaties and agreements, and the Bank," mashhadani told local media. The Federal Reserve has made a commitment to the treaties granted to independent banks."[/ltr]

[ltr]He explained, "There are two types of bank links, banks that follow governments and operate with the government plan and this is what was adopted by the Central Bank before 2003 where the Central Bank was subordinate to the Office of the Presidency of the Republic or the Ministry of Finance, and after 2003 a decision was issued order 56 of 2004 granting full independence to the Central Bank "The central bank's finances are supposed to be treated as independent, away from the government," he said.[/ltr]

[ltr]"The big mistake is not from the Americans, but we put our money in the Federal Reserve when we had a good relationship with America, and it was supposed to be distributed to more than one bank in Britain, France and China," he said. Half of its reserves are in Us Treasury bonds at a simple interest rate of half 1% and we are talking about 37 billion dollars half of the reserves."[/ltr]

[ltr]"The sanctions are supposed to be gradual, as imposed on Iran," he said, adding that "the mere announcement of sanctions will lead to panic among investors and capital, and this is what happened in the early days when the exchange rate rose to 125,000 to 100 dollars."[/ltr]

[ltr]"This panic has led the central bank to increase its sales from the dollar from 275 to 365 and now the central bank is selling about 300 million, which means the bank's sales more than revenues," he said.[/ltr]

[ltr]"If the central bank's sales remain that way, we will sell six and a half billion, while our oil revenues are seven billion, and then the central bank will have to use its reserves to maintain the exchange rate," he said.[/ltr]

[ltr]"If sanctions are imposed on oil, we will only have the capacity to withstand six months, because our economy does not allow it," he said.[/ltr]

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