Investor's wiki
en English
Navigation
Home Glossary
InvestingStocksBondsCryptoPersonal FinanceFundamental AnalysisTechnical AnalysisTradingBankingTaxes
Disclaimer Terms of Use Privacy Policy Cookie Policy
Navigation
Home Glossary
InvestingStocksBondsCryptoPersonal FinanceFundamental AnalysisTechnical AnalysisTradingBankingTaxes
Disclaimer Terms of Use Privacy Policy Cookie Policy

Iraqi Central Bank

Iraqi Central Bank
EconomyMonetary Policy

What Is the Iraqi Central Bank?

The term Iraqi Central Bank alludes to the national central bank of Iraq. Laid out as Iraq's independent central bank by law in 2004, the bank oversees domestic monetary policy and directs the country's financial system. Usually alluded to as the Central Bank of Iraq (CBI), it is settled in Baghdad and has four branches in Basrah, Mosul, Sulaimaniyah, and Erbil.

How the Iraqi Central Bank Works

The Central Bank of Iraq was made on March 6, 2004, as the country's independent central bank. Its formation was required by the occasions that hinted at and the aftermath of the U.S. attack of Iraq as well as the fall of former leader Saddam Hussein. The bank was laid out with 100 billion dinars in capital given by the state in exchange for 100% of the bank's capital stock. The federal government is the sole owner of this stock, which was not transferable. Mustafa Ghaleb was named legislative leader of the central bank by Prime Minister Mustafa al-Kadhimi in September 2020, as per a report from Reuters.

The CBI's primary objectives are to guarantee domestic price stability and to foster a stable and competitive market-based financial system — a system that comprises of banks, financial companies, stock exchanges, and insurance companies. In satisfying these objectives, the CBI plans to support sustainable growth and employment in the country.

The CBI embraces the following fundamental capabilities to meet these objectives:

  • Executing Iraq's monetary policy and exchange rate policy
  • Overseeing and holding Iraq's gold and foreign exchange reserves
  • Giving and dealing with the national currency of Iraq, the Iraqi dinar (IQD)
  • Managing the payment system alongside directing and administering the banking area

The CBI oversees exchange rate policy for the Iraqi dinar, which is pegged to the U.S. dollar. The International Monetary Fund (IMF) depicts the peg as a key anchor for the economy — it is somewhat the USD peg that brought about supported low and stable inflation in Iraq, around 2% average for a very long time.

Assuming you're keen on investing in Iraq, talk to your financial advisor or broker about bonds, mutual funds, or exchange-traded funds.

Special Considerations

The CBI faces a number of difficulties, including the management of its monetary policy. One of the main pressing concerns of concern comes from ISIS revolt in parts of the country. The group is accepted to be responsible for a number of serious financial interruptions. As per a Newsweek report, CBI said ISIS plundered roughly $800 million from the country's banks somewhere in the range of 2014 and 2017, the vast majority of which was designated in Iraqi dinars. This incorporates reserves from the Trade Bank of Mosul — the principal institution Baghdad utilizes for trade and financing.

One more key issue for the central bank comes from volatility and variances in oil prices. Oil exports are a primary source of foreign currency for Iraq and, in this manner, important to the country's economy. As per the Organization of the Petroleum Exporting Countries (OPEC), Iraq's crude oil exports added up to very nearly 4 million barrels in 2019. The decline in oil prices — was a main thrust behind the fall in Iraq's foreign reserves — from $54 billion toward the end fo 2015 to $45 billion at the close of 2016.

Global oil prices fell in mid 2020 placing economic and social conditions in the conflict torn country under extreme tension. Total Iraqi oil revenue fell by close to half from $5.05 billion in February 2020 to $2.99 billion in March.

Iraq's lack of measures to forestall money-laundering and counter-psychological militant financing alongside its inability to reinforce hostile to defilement legislation additionally factor into the CBI's difficulties. In light of the country's lack of action to push ahead on these issues, it was eliminated from the Financial Action Task Force (FATF), which was made in 1989 as a way for member nations to cooperate to combat these global issues. Counsels among Iraq and the IMF covered issues like the structure for its fiscal policy as well as the requirement for laws encompassing enemy of debasement and participations between various government agencies. Thusly, Iraq was not brought once again into the FATF but rather stays the subject of monitoring.

Features

  • The CBI was laid out in 2004 after the U.S. attacked the country.
  • The CBI has confronted special difficulties throughout the long term, including the plundering of banks by ISIS and changes in the price of oil.
  • The bank keeps up with its currency pegged to the U.S. dollar.
  • The Central Bank of Iraq is accused of carrying out monetary policy and directing the country's banking system.