There is an article published in local Baghdad media that the headline of the article headline read:
The Central Bank to take “Measures to boost liquidity” and to facilitate the sale of foreign currency.
The Central Bank of Iraq (CBI) has no intention to shutting down the currency auctions. The sales are used to increase the CBI reserves by selling U.S. currency in exchange for Iraqi dinar. The CBI charges a fee for each transaction. The CBI profited over 49 billion dollars last year in the currency auctions.
If you get a moment read the English version of the news article that was originally in Arabic.
After you had read the news article, you learnt that the CBI held a special session with the Iraqi parliament economic committee. The meeting is not unusual as it is very common for the staff of the Central Bank to meet with the Iraqi parliament.
The CBI discussed on how they will be able to increase liquidity in the banking system and acquiring government debt instruments. According to my most reliable sources, is that the Iraqi government has in place no business with any private Iraqi bank. In 2009, the Ministry of Finance issued a memorandum that the Iraqi government would not conduct any business with any of the private Iraqi banks. After the directive, the Iraq government had withdrawn all state funds from Iraq private banks. And ever since the directive no government check or funds would involve any of the private banks. You can imagine that not having the Iraqi banks involved with government projects would limit what a private bank could do to increase services and products to the Iraqi people. If the government wanted to fund a construction project, the funds would be deposited in one of the state run banks.
The Central Bank would like to change the directive that the Ministry of Finance had issued several years ago. The change would be to allow the government to conduct transactions with the Iraqi private banks. As it stands right now, all government funds go through the two state banks and the Trade Bank of Iraq (TBI).
The CBI would like to increase the auctions by conducting better transactions in cash when conducting the sale. The CBI wants to streamline the sale transaction making it faster, so the client can receive their funds quickly. There are complaints from clients on how long they have to wait to receive funds. The liquidity will increase after these changes are made.
The Integrity Committee will be completing their investigations on 16 Iraqi banks that may be charged with forgery. It is unknown at this time which banks are involved or how this will affect the banking industry.
The CBI may have to use the reserves to offset the 25 trillion Iraqi Dinar deficits in the 2015 budget. I’ve said in the past do not look for any resolution on the 2015 budget until late February or and entirely possible March. I have to remind you that 2012 and 2013 budget were not final until the calendar month of March.
I hope you get a chance and read the news article. I know it is not a real good translation, but you can get the idea of what is happening with the CBI and the Iraq government. If you have any questions, you can email them to me, and I will do my best to answer them.