Since the change of the former regime in 2003 Iraq adopted a market economy which is reflected in international economic relations and make it focus on the role of the private sector in development, and confirmed the Constitution
The liberalization of financial flows contribute to economic growth, but it requires tighter control on the phenomenon of money laundering because of the inclusion of economic freedom financial and banking sector.
Auction currency is a foreign exchange market where demand for the currency supply and then made up the exchange rate. The exchange rate has remained stable for a long time because of our success in increasing volume of foreign currency to provide flexibility and confidence in an interview request. The process of determining the exchange rate must be held smoothly because the blocking will affect demand for the dollar and demand to be obstruction will satisfy the market saturation will be higher exchange rate so it gets confusion in the market and the introduction of multiple exchange rates, which hamper the economic decision-making and implementation.
Not all banks the task of the demand side of the BA constituent acts deposit accounts at the Central Bank used for the purposes of monetary policy and foreign exchange auction. These accounts may be checked in the same banks that have within their administrative department to check money laundering.
Although the auction is used mostly by dealers import through business conformance must stress that a monetary policy that draws Iraqi dinar from the market, which reduces the pressure of liquidity and its impact on inflation. The previous Administration has confirmed to the Central Bank in its statement issued on 22/5/2012 and can be reviewed through the Central Bank of Iraq. The use of foreign currency to import also leads to reduced inflationary pressures, but this is within policy.
The process of buying foreign currency as we are purely monetary process and under the instructions of the Executive Committee of the buying and selling of foreign currency or auction Commission. This includes checking the documents and whether the Bank has banking problems related to capital or monetary policy rate set by the Bank. And the Central Bank gives USD because it receives JD suit (we before cash process) Although the dollar might be used commercially (after coming out of the Central Bank) and the numbers of final import to the statistical authorities by the Ministry of Commerce and the customs services. Therefore, you should not blame the Bank because he did not follow the import process. In other words, not only must the Central Bank believes that public money is not wasted years there was no import.
It is likely not to control the currency market for the period you get disparity between official rate and market rate. This is due to many factors of supply and demand, some crises may occur that generate an increase in demand for the dollar as a safe and secure. It is also possible to provide banks with Central Bank dollar, but it is not possible to deliver this to the ultimate beneficiary of the dollar before banks the flexibility required. All of these things hinder the smooth flow of foreign currency and get market price rises. These phenomena impede the flow of the market and often occur in developing countries, especially including Iraq.
Fluctuation in the exchange rate began during the previous administration at the beginning of the year 2012, as a result of external circumstances characterized by severity, are those related to events in Syria and Iran, and coincided with the withdrawal of u.s. troops from Iraq. These circumstances have led to a significant increase in demand for dollars, which raised its price in the market. This has led to the former administration to restrict the offer in response to these changes, which led to heightened volatility.
In September 2012 resulting from intensive discussions apply circular issued on 1/10/2012 leading to exchange rate stability since edit procedures for the dollar. When the new administration took over the responsibility of the Bank in October 2012 the exchange rate stabilized for a limited period but started from the end of 2012 oscillation until present day.
The Central Bank has announced that it will be to use documentary credits to finance trade transactions. Although documentary credits are a good method of trade financing, this purely commercial issue. The Central Bank must finance all debtor side of balance of payments and trade balance only. Events not covered by documentary letters of credit would go to the market, it creates another price. And documentary credits also include all financial flows, for example, there is nothing to prevent Iraq from the overseas savings while waiting for improved conditions at home, returning the funds to invest in Iraq. We must look to the Central Bank as a commercial enterprise. As stated earlier, the auction currency is the monetary policy. The Central Bank stressed that the World Bank should work to stabilize domestic prices and the exchange rate, and if this goal required to achieve increased money supply, why accuse the Central Bank that he wasted public money? Why the Central Bank tried to apply its law which provides for immunity from legal proceedings (article 23)? Many central banks in the world have this immunity. Why should the Central Bank be held accountable for the business process being outside even though cash and cash currency Foundation?
The primary accomplishment of the Central Bank is the stability of prices by dragging the dinar by selling the dollar. This is part of monetary policy as part of trade policy (outside the Central Bank) is to use dollar commodity import and supply which neutralize inflation significantly. But if we leave aside the cash side and our perception that the private sector imports is purely commercial and finance such imports come from foreign currency available to the Government (Development Fund for Iraq, for example) and not from the reserves of the Central Bank, the Central Bank’s fundamental interest in reducing inflation, which can play an important role in trade policy. The basic principle by which the Central Bank operates is that demand and do not know whether the Government will work with the same standard and what is the impact on the exchange rate in this case.
The staff at currency auction committees are eager to have foreign currency flows smoothly from the demand side to ensure stability in the exchange rate and domestic prices, and that is the objective of the World Bank. That these employees did not waste public money they received TD vs dollars that gave and they fully met the demand on the dollar depending on the requirements of monetary policy, as they will be if they do not satisfy the demand of the market at a higher price and this would contravene the principle of stability of the currency and the Central Bank law. We must stress here that the objective of the Central Bank is the stability of prices including the exchange rate, the Central Bank is not the goal of trade financing. In other words, that the Central Bank could change its policy if the exchange rate but it will not change its policy of necessity if trade this installation sets with other commercial or financial policies. Currency auction committees must pass orders for the dollar because the prerequisite in the process of Exchange have been achieved and is the dinar, and obstruct the exchanges here will lead to the instability of the price or more than the rate in the money market. This economic and legal violation does not want any member of the Central Bank.
The work of the Commission on the auction currency must be characterized by speed and accuracy, the Committee scrutinizes citations from banks about lack of money laundering operations, but this audit should not amount to obstruction even unimpaired exchange rate. The Commission also makes sure that enough banks to exchange the Dinaric dollar conversion is financed from the bank account of the Central Bank. For the Central Bank gives USD for dinar, the issue is not only a cash swap.
Stages of the process of obtaining foreign currency begin to submit an individual application for import or for other purposes to commercial bank which demand detailed checks,. But not supposed to verify the Central Bank (an institution) that would give foreign currency details at the commercial banks. The Central Bank in this case is like a wholesaler. It checks the Bank irregularities, receives the citation on that bank money laundering. Most of all to give the dinar-dollar receives a uniform exchange rate. If there are lists of business with demand they should check on the level of commercial bank because it offered. In any case, the commercial bank go data copy to the money laundering unit at the Central Bank to continue.
And about the relationship of the commercial banks at the Central Bank, article 40 of the law on the Central Bank to supervise banks, which includes vacation and supervise banks and issuing instructions on its work. It is not the Central Bank’s banking operations at the level of individual lending operations. The Central Bank’s relationship with banks is through banking and credit service which tracks banking and its conformity with the requirements of monetary policy, and through the currency auction where the Bank receives a transfer request and quote about that Bank’s operations of money laundering through money laundering reporting service in the Bank for subsequent follow-up and money-laundering operations at the level of individual process.
All operations within the market or currency auction and its role in determining the exchange rate go copy them directly to the money laundering reporting service in the Bank to do more checking of suspicious operations. Follow-up is carried out within and outside Iraq and with counterparts in various countries. The service is competent to pursue money laundering and particularly suspicious operations.
Currency auction committees at the Central Bank is not concerned with issues of money-laundering, although it received citations that bank money laundering as we mentioned earlier, responsible for monitoring money laundering reporting service at the Central Bank, they receive the auction data from the outset.
To check money laundering in the banking circles of money laundering in banks and money laundering reporting Directorate Central Bank and it is not the duty of the auction committees must pass requests for foreign currency quickly and smoothly the cash market is very sensitive to any delays in the flow of information to affect the exchange rate. That money-laundering Directorate receives lists of requests for conversion at the same time that it receives these lists and auction committees have sufficient time to proceed and news. Banks must tell the Department reporting directly from the Central Bank of any suspicious transaction, in accordance with article 17 of the law on money laundering, reporting service BA news security actors.
Attempts to detect money laundering requiring banks to identify sources of TD to be deposited. It quickly converts the dinar to the dollar, and the dollar has for purchasing goods and services everywhere in the world. So the question of martyrdom on money laundering by banks are gaining importance. The judgement in the case of money-laundering derived from citations and checking the money laundering reporting unit in the Central Bank.
Department of money laundering that could raise doubts about all processes and are able to address directly the banks there is a circle of anti-money laundering in banks.
Under article 12, paragraph 4, of the anti-money laundering Act of 2004 on it (if the money laundering Office complained that the transaction reasonably made or initiated involve funds derived from illegal activities or money laundering or funds intended to be used in the financing of crime or funds owned by the criminal organization the right to dispose, or finance terrorists, or treatment intended for any other unlawful purpose, the service immediately Notify the competent investigating and prosecuting authority.) . This means that the Office of the reporting does not necessarily refer to the Governor of the Central Bank or ask permission from him or from the Bank to notify the competent investigating and prosecuting authority. The reporting service remained operational independence.
The basic properties that must be available in the money market to enter bank or auction currency is in addition to his ownership of Iraqi dinars sufficiently into account at the Central Bank, but also in the development of disease met its obligations to the Central Bank and deposit free of money laundering. And follow-up process of money laundering takes place after the end of the auction process it should not affect the process of determining the exchange rate. to check money laundering is the process of validation and security while the auction process as purely monetary policy.
The auction currency available to all banks that have not committed offenses. The belief was popularized during the campaign against the Central Bank since the end of last year that the Bank sells foreign exchange to certain banks. the auction is available for both banks and currency auction data do not indicate that the sale is for certain banks, most banks enter the currency auction and unevenly. The process of selling foreign currency are determined when the demand of commercial bank or the buyer and his response by the Central Bank or the seller. This issue will depend on market conditions and the needs of the Bank in different fields as it is possible to request certain banks foreign currency or required by all banks. It is also possible to enter the auction Bank one or both banks, but it is possible in theory but no bank auction enters. It all depends on the activities of banks and market conditions. The Central Bank does not choose the Bank that sold him. Some banks buy than others because they are more active than others and not because the Central Bank favours. Of course, as we have all gotten the banks operations in terms of banking irregularities in terms of money laundering.
The Central Bank now sells six days a week, while the previous Administration sells five days and never did not adopt the system six days a week. Financial markets (in particular financial and monetary operations of the Central Bank) not work during holidays and when there is a working day in the banks. Despite that, in many States you may find buying and selling currencies by cashier in holiday but however expanded operations are limited and do not take the form of an orderly market.
The previous administration was able to stabilize exchange rates before you leave work in mid-October of last year, at least one month. It must be emphasized here that successful monetary policy is measured by maintaining price stability, not by reducing the amount of sale, especially if a sufficient reserve.
I assumed the present leadership of the World Bank, through the Iraqi TV in March, daily currency auction sales must
not exceed $ 100 million, but the sale at present average double that amount, the new Administration said that this increase in the conversion was the smuggling of funds, washed or does it have it and what actions have been taken in this respect and what is the opinion of money laundering reporting service in the Bank Governor and talk do you follow? This and we would like to note here that the report does not raise any situation or issue where suspicion of laundering or terrorist financing to the Bank but the first Deputy Speaker of the House of representatives in the parliamentary debate on 8/11/2012 this reporting service was complaining about ((terrible)) for money laundering, the Central Bank.
That sale now started approaching the method followed by the previous administration and is moving toward satisfying the market but the market price is still higher than the bank rate and this means that the present Administration still restrict or follow restrictive measures although oust reserve concern. The price is determined by demand-supply meeting point. The principles of economics. These developments indicate that the Central Bank’s goal is to sell less not that works on exchange rate stability.
The economic stability as a result of exchange rate stability and reducing inflation in General is an essential process for the development and implementation of projects, especially those that need imported users.
The problem now is the problem of the Iraqi economy, policies and resources are not a problem. The country now suffers from a lack of political stability and security which impede development and decision-making, we have now also suffer from a lack of economic stability as a result of the instability of the Exchange. That would affect confidence in dinars, which started less (Please be temporally) which explains the great desire to acquire dollar now when the public as a commodity. The lack of stability of domestic and regional conditions, in turn, encourages greater demand for the dollar. There is no doubt that this is an important factor in the fluctuation of the dollar but that the Central Bank was selling dollars, we are restricted to high demand and restricted view. You must recover the stability so that policy makers make decisions especially with regard to the external sector, which is particularly important in the Iraqi economy.
Auction currency problem is really the problem of the economy, the Central Bank is not a problem.
Should the Central Bank provides an enabling environment for the development of the most important elements of this environment is exchange rate stability. But taking advantage of this environment depends on the efficiency of the real economy, particularly its susceptibility to develop exports of non-oil sector and formulate appropriate policies of the Government and its organs. If the real economy is suffering from low productivity of the private sector to import nearly everything and exchange rate dinar will decrease but the large reserves can import finance and balance of payments gap and keep the dinar from falling and this is what happens in the auction of foreign currency. Better to keep our dinar through production and create non-oil export capabilities, it is the duty of the productive sectors (governmental and private sector). Must develop the non-oil export and scalability if gradually even less reliance on oil revenues and foreign currency auction, based on oil.
Not supposed to blame the Central Bank for development has been funded, and there seems to be from the Government and some members of the House who wants to access in this way. The Central Bank must be blamed if it does not provide or participate in providing the appropriate environment for development by providing a stable financial and economic environment. The instability of the exchange rate is one of the essential features of the political instability and disrupt or delay the economic decision-making and implementation.
Have you ever asked themselves why Government depart and Iraq are humans the production elements in the country? If there is an appropriate political and economic circumstances were these items will leave Iraq? If these production elements in Iraq would be the easiest solution to the problem of the exchange rate that will remain in Iraq in an investment environment and productivity. This is the environment that must be available and this is the responsibility of the Government. That auction deals with economic conditions in which many changes, especially with regard to the financial sector. In addition, Iraq is undergoing a period of transition, there is first the transition towards market economy and has the text of the Constitution on the importance of the private sector within it. There is also a move to an economy of peace from war and siege economy (which has been with us for a long time) which is a development of great importance. There is also integration with the international community, which must settle things with him as most of Iraq’s problems with international dimensions. This includes solving the debt problem and the normalization of economic relations with the international community and international economic and financial institutions. To deal with the international community, which acquired great importance in our development requires significant administrative capacities and substantial international support, demonstrated the importance of this during our negotiations with the Paris Club and the monetary and financial negotiations with international institutions, especially the International Monetary Fund.
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