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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    Punishing Iraq's banks: a shake-up in the financial sector and expectations of dollar scarcity

    Rocky
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    • Post n°1

    Punishing Iraq's banks: a shake-up in the financial sector and expectations of dollar scarcity Empty Punishing Iraq's banks: a shake-up in the financial sector and expectations of dollar scarcity

    Post by Rocky Sat 22 Jul 2023, 7:16 am

    [size=47]Punishing Iraq's banks: a shake-up in the financial sector and expectations of dollar scarcity[/size]


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    Baghdad

    fair deputies


    July 22, 2023

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    A cashier in a street in Baghdad (Mortada Al-Sudani / Anatolia)
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    The decision of the US Treasury Department to impose new sanctions on [You must be registered and logged in to see this link.] months after imposing similar sanctions on 4 important banks due to financial dealings with Iran and others related to money laundering operations, caused a rapid reaction inside Iraq, as it led to a decline in the value of the dinar against the dollar, along with the influx of depositors to the punished banks to withdraw their money deposited in [You must be registered and logged in to see this link.] .
    And the Iraqi dinar on the Baghdad and Erbil stock exchanges recorded a sharp decline by 1520 dinars per dollar, after it was between 1450 and 1460 dinars on Wednesday. The Wall Street Journal, on Wednesday, quoted US officials as saying that the United States had prevented 14 Iraqi banks from conducting transactions in dollars.
    The newspaper's report stated that the ban, imposed by the Treasury Department and the Federal Reserve Bank, is part of "a comprehensive campaign against the transfer of US currency to Iran."
    The newspaper added that the United States revealed information that Iraqi banks were involved in money laundering and fraudulent transactions, some of which may have involved sanctioned individuals, and raised concerns that Iran might benefit from these transactions.

    Local penalties

    An official source in the Central Bank of Iraq told Al-Araby Al-Jadeed that “the bank’s administration has officially received the imposition of US sanctions on a number of banks, which included the Islamic Advisor Bank for Investment and Finance, Al-Qartas Islamic Bank for Investment and Finance, Taif Iraq Company, Elaf Bank, Erbil Bank for Investment and Finance, International Islamic Bank, Trans-Iraq Bank, Mosul Bank for Development and Investment, Al-Rajih Bank, Sumer Commercial Bank, Trust International Islamic Bank, Ur Islamic Bank, Islamic World Bank for Investment and Finance, Zain Iraq Islamic Bank for Investment and Finance.”
    The source continued: "The central bank administration worked to stop all transactions in dollars with those banks and prevent them from entering the currency auction on Thursday."
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    [size=12]energy
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    And the source, who asked not to be named, indicated that the penalties are local, pointing out that the latter "will not stop all of these banks' work, but will only prevent them from dealing in dollars, while other banking operations will not be affected by the imposed penalties, especially since those banks have bank accounts for citizens worth billions of dinars, and those banks also have many employees' salaries that are localized in them, so this business will continue normally."
    He added, "The imposition of US sanctions on 14 Iraqi banks will have a significant impact on the Iraqi economic and financial situation, and these sanctions will have repercussions on raising the exchange rate of the dollar in the local market. Preventing these banks from dealing in dollars will cause a new scarcity in the US currency, and there will be a new resort to buying the dollar and withdrawing it from the market, which raises its value."
    The official source in the Central Bank of Iraq concluded, "According to information received from the US Treasury, there is another group of Iraqi banks that may be subject to sanctions during the coming period, due to the monitoring of their illegal activities in sending currency to Iran, especially since money transfers in dollars are all closely monitored by the US Treasury and the US Federal Bank."

    Gradual rise of the dollar

    For his part, Mustafa Al-Karawi, a member of the Finance Committee in the Iraqi parliament, told Al-Araby Al-Jadeed that “significant economic repercussions will be witnessed in the Iraqi financial market, due to the imposition of sanctions by the United States on a number of banks, including the rise in the exchange rate of the dollar, which witnessed a rapid rise a few hours after the imposition of those sanctions.”
    Al-Karawi warned that "the rise in the exchange rate of the dollar will not stop and there will be a gradual rise every day, and this matter requires a real government stance and measures to address this matter, which could turn into a cash crisis like the one that occurred during the past months with the beginning of the formation of the new government, and this matter requires Iraqi diplomatic movement towards the US Treasury and the US Federal Reserve."
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    [size=12]Markets
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    He added, "The Finance Committee in the Iraqi parliament will work to host the responsible figures and authorities in the Central Bank, to discuss the repercussions of imposing sanctions on a number of private Iraqi banks, and to find out what the bank's procedures are to address the significant increase in the exchange rate in the local market."
    On the other hand, Mustafa Akram Hantoush, an expert in financial and economic affairs, told Al-Araby Al-Jadeed that “the imposition of US sanctions will restore the crisis of a significant increase in the exchange rate of the dollar in the local market. It will also have an impact on the reputation of the Iraqi banking sector in front of the international community. These sanctions confirm the involvement of these banks in acts that violate international laws.”
    And Hantoush indicated that "the imposition of US sanctions on some banks confirms the lack of Iraqi control by the Central Bank on the work of the sector, in contrast to the US control over the work of banks, which indicates the difficulty of removing any dollar from Iraq towards the US-sanctioned countries, led by Iran."

    Not the last

    Hanoush stressed that "US sanctions against Iraqi banks are not the first, and most likely they will not be the last, and this matter requires an Iraqi government position to stop the sanctions on the remaining local banks, and monitor the work of banks regarding preventing dealing in dollars with Iran, Syria, Lebanon and Russia."
    In turn, an official at Elaf Bank, one of the banks included in the US sanctions list, told Al-Araby Al-Jadeed that the bank had received a notice banning its transactions in dollars, stressing in a phone call that "the banks will continue to operate in the local currency," refusing to comment on the US decision regarding the involvement of the punished banks in "suspicious" financial transactions.
    And the Iraqi financial expert, Ahmed Al-Janabi, considered that the private banks had failed to implement the Central Bank's instructions, and had become a burden on the Iraqi economy. Pointing out that there are several reasons for the failure of these banks, most notably their reliance on quick profits in the currency auction, without significant financial risks, their inability to attract and develop deposits, and the failure to achieve investment goals due to the failure of private banks to attract real capital and employ them in the economic fields.
    Despite the Iraqi government's approval of a package of financial measures, the most prominent of which was fixing the exchange rate of the Iraqi dinar at 1,320 dinars against one dollar, despite the fact that several months have passed since this decision, the difference is still large between the official exchange rate approved by the Central Bank of Iraq and the parallel market.
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