Search our economy unique to the deployment of the central bank governor on the sale of currency and monetary reserve Iraqi window

International reserves and foreign currency sale window in the Iraqi Central Bank
Ali Mohsen Ismail

Governor of the Central Bank of Iraq and the Agency
in October 2015

The study deals with the answer and clarification on the following questions:
* What deity of international reserves and the reasons for their composition and targets to use it! What are the criteria that measure the adequacy of those reserves? Wayne stands our reserves of it.
* What are the rules governing the sale of operations controller (dollar) through the Central Bank of Iraq window.
* What are the limits and determinants of central bank control over the sale of the dollar operations.
* What are the possible options to define the role of the central bank in the process of selling currency foreign? What are the options in determining the amount of sales: As a purpose? What are the pros and cons about each option.
* What are the conclusions of the study that link?
The rules that govern the sale of foreign currency: the process of sale of foreign currency (dollar) through the Central Bank of Iraq is governed by the following laws and principles window:
O.qanon Central Bank No. 56 of 2004, which defined in Article (28) of open market operations and facilities list, from which the provisions of paragraph ( B): to buy or simple sales unconditional (cash or term) of foreign currency.

B.alambadi guidelines issued by the International Monetary Fund, and approved by the Member States (including Iraq), and was among those Principles do not put restrictions on the sale of operations or the purchase of foreign currency.

J.dstr the Republic of Iraq, which the Iraqi economy status in the framework of a market economy, competition and freedom and to support private sector activities, and the consequent activation of laws of the market, including supply and demand.

D.qanon anti-money laundering No. 93 for the year 2004, which requires all financial institutions 0 banking and non-banking) to investigate the customer's identity when opening an account or conducting financial transactions, and inform the Central Bank for transactions suspected, the central bank is watching the commitment of these institutions to do so.
Based on the predecessor of the Central Bank deals with operations sale and purchase of foreign currency on it:

O.amilit open and must be on the central bank not be constrained by restrictions.

B.mracbh banks and other financial institutions to ensure their compliance with the law to combat money laundering and investigation of clients and sources of money to prevent the use of banking channels or financial to pass suspicious transactions may involve on money laundering crimes or terrorist financing.

2.adavh to the laws and rules that passed mentioned that the sale and purchase of foreign currency operations control, the nature of revenues and the financing of government spending, and financing foreign trade and bridging the deficit in the balance of payments, impose a particular and specific reality of the operations of buying and selling currency foreign, where most of the imports of the Ministry of Finance are foreign currency (dollar), and most of its expenses in Iraqi dinars as noted in the state budget the ministry whereupon sell the dollar at the central bank, which in turn, re-sell it to the private sector, to get the dinar covering the private sector its imports in dollars the buyer, as well as to cover other applications of various kinds, and thus what the central bank imposed monopoly Dollar source mainly, and which is funded by the state budget and cover the deficit in the balance of payments and when demand for the dollar will be less than it earned by the central bank goes surplus (the difference) to the foreign currency reserves, and when the demand for the dollar higher against the dollar supplier uses the central bank currency reserves to cover the deficit (the difference), so Valahtaati rises and falls depending on the relationship and within this process is achieved to maintain the exchange rate, and realized the basic function of the reserves foreign, and not with the Central Bank of tools to reduce the demand for foreign currency but to raise the official exchange rate of the dollar against the dinar n which represents a difficult choice because the increase is reflected in prices and increase the suffering of groups and sessile income, as well as its impact on other aspects.

Also, reduce the foreign currency sales the private sector, and regardless of the legal and regulatory adapted, means a widening gap between foreign currency supply and demand in the market n and its result increase the difference between the official price and the price the last buyer, and high import prices, and thus brokers category gains, rising to levels not reasonable at the expense of the national economy The budget for the general and the citizen.

As the central bank can not influence the demand for foreign currency, as progress, it also can not control reluctant foreign currency which it had received from the Ministry of Finance or other actors (the diminutive contribution), and for this reason we say that the central bank to Aatgm the size of reserves foreign, any rise and fall to factors outside his control, and therefore be clarified which over the sale of foreign currency process is governed by the nature of the financial resources cycle and factors of demand and supply, the central bank and the leading role of the balance between the two in order to preserve the exchange rate and thus preserve the public prices and purchasing power. speech spins mostly about the reason for the central bank sales of the dollar (offer), and items are not talking about the reason for purchases of the dollar (demand), while the research and analysis on the demand side leads to correct gaps and imbalances developments in the macroeconomic and fiscal policy, and other phenomena that affect, that demand to buy the dollar strength due to several reasons beyond the control of the central bank, such as:

* weakness or limited production base and single resources, and a lack of vision or model of macroeconomic, and the consequences of reliance on the import of goods and services is almost total.
* capital flight abroad, investment or Odjara because of the absence of political stability and security, the big challenges facing the work environment.
* weakness and corruption of tax and customs organs, which creates high incomes tend to excessive consumption or escape on the outside and both are a direct pressure on the demand to buy dollars.

* limited remittances from abroad, the failure to attract investment into Iraq.

* weakness of the banking system and its inability to mobilize resources for the purposes of revitalization of economic sectors, and high liquidity ratio has to his reluctance to make loans because of the situation and limiting its activities and services on marginal operations and limited investment.
* inadequate health, education and tourism services within Aeraguen forcing many to travel outside Iraq to receive those services.
* great migration numbers of citizens to other countries after the sale of their property and turn it on the outside, especially after what has happened many areas to crimes of terrorism and military operations.
* severe lag in the application of laws that limit of dumping the Iraqi market of imported goods and stimulate national production policy and those
laws: the tariff
law. Domestic Product Protection
Act. Consumer Protection Act.

In addition to the chronic imbalance in the border ports resulting in extreme weakness in the application of laws and regulations and standards of quality control management . central bank sales analysis of the dollar and the transfer abroad on the ground that it concerns exclusively Balastairadat and higher sales amount for the estimated imports placed under suspicion table, analysis neglects the other purposes of the conversion, there is a significant share of remittances represent the migration of funds abroad in addition to a variety of purposes other personal and even foreign currency possession inside Iraq. common errors compared to government revenues from dollar sales of the dollar, as some assume that sales should match or be less than the revenue of the dollar, on the basis that imports the government is determined mainly on the sale of oil, and therefore it has to think that the government does not agree more of its oil resources n and thus where it comes from demand for the dollar.

And here make it clear: that the demand for the dollar comes from the local currency 0 dinar) n and the quantity that exposure of the local currency is not only the source of the replacement of the Ministry of Finance its supplier dollar dinar, There's even a government spending covered from remittances, Treasury bills and local loans (from government banks) Foreign loans, for example, the total borrowed government (from the sources mentioned) is about 15 trillion dinars to cover the shortfall this year, and this amount in the majority turns into demand for goods and services, which are often imported and thus linking central bank sales vendor-oil link is not accurate because it did not take into consideration the money supply (JD) derived from the sources listed in addition to the loans granted by banks to the private and the public sector, and we note here that the draft law budget for the year 2015 included finance the budget with loans, bonds and other more than $ 20 trillion dinars almost fill the projected deficit. drop in oil prices by 45% about not accompanied by a decline in the share of foreign companies extracted oil, because those companies charge a share of the amount of production, regardless of on the sale of a barrel price, which means a direct and sharp decline in the dollar supplier to the government and thus lower received from the dollar to the Central Bank, where he goes about 35% of the oil revenue to those companies when the price per barrel to $ 45, and if we take into consideration that there is a rate of about 25 % of the dollar supplier goes directly from the Ministry of Finance to pay imports Government and obligations foreign debt, the size of the decline in the dollar received from the Central Bank would be great, and with the continued issuance of the state budget a large deficit is financed is the basis of loans and transfers and internal bond, it means a decrease in the Imports from the dollar is not offset by a reduction in spending to the same degree and coverage of those versions in local currency means that demand for the dollar will remain high (height of spending) is not offset by Ward dollarised the same level, and this chronic phenomenon in the oil-producing countries, covered when he spoke of using foreign currency reserves, as happened in 2009, reaching the central bank sales ratio of dollar to import Bank of the dollar, the percentage of 148% and be compensated in years with high oil resources.

International Reserves:

7.rgem all aspects and challenges that surround the economic, financial and monetary reality, Iraq still retains a good reserve in accordance with international standards.
Guidelines for the management of the International Monetary Fund and international reserves have identified in 2001 a set of general economic indicators can be guided by them to denote to the extent appropriate or optimization volume of foreign reserves that reservation by the State, namely:
1.nsph reserves to cover imports sufficient to cover the import of 6 months.
2.nsph cover the reserve money supply: up to be 1: 1.
3.nsph reserves to cover external debt: equal to one (debt maturing within a year).
According to the criteria mentioned Iraq is of high-reserve countries, but that some of the studies, including the Arab Monetary Fund studies are Iraq from Arab countries, which exaggerates the size of the reserve (in addition to Saudi Arabia, Algeria and Lebanon), where is this Iraq states ranked first among Arab countries in covering up imports as measured by the number of months covered by that.

As shown:

Country Number of months of imports covered by reserves 16.1 15.7 14.9 7.6 6.3 5.2 4.5 3.9 3.4 3.4

The coverage of reserve money supply ratio of about 170% and is one of the high percentages (where usually ranging between 70% 100%) and the percentage of coverage of the reserve of external debt the short term, they are very high. the central bank and in the framework of control on the sale of dollar operations Foreign remittances, it stems from an objective understanding of what deity and the nature and objectives of the foreign currency reserves, which over the mentioned, and based on that understanding (internationally agreed mirroring with the guidelines of the International Monetary Fund), the role of the central bank is preventive censorship is primarily to prevent the use of sales to money-laundering operations or the financing of terrorism, and oversight of deterrence to take the necessary action on violators in accordance with the applicable laws and instructions of the Central Bank of the bank, and that the essence of the control process in this regard is on the transparency and legitimacy of the funds that are buying the dollar out, without placing restrictions on the sales because the effects of serious results and pour in the end in favor of the beneficiaries and speculators were affected citizens (rising price of goods), as well as a violation of Iraq's commitment to the liberalization of sales restrictions (according to accepted guidelines for the International Monetary Fund).
Control of the Central Bank: preventive and deterrent effective banking supervision based on the terms and conditions of its existence directly affects the effectiveness of banking supervision, and indicate studies and the experiences of countries and organizations concerned so that the effectiveness of controls depends on the following conditions: *
economic sound and sustainable macroeconomic policies.

* framework and a national plan aimed at financial stability (the involvement of all parties concerned).

* legal and regulatory structure, which covered: business laws, accounting rules advanced, independent vocational in the areas of accounting, auditing, law, effective and safe systems for clearing and settlement of payments, effective offices of Credit Bureau, data and statistics economic, financial and social, independent and effective judicial authority.
* coherence and complementarity between the state institutions in the framework of exchange of information, and joint coordination in matters of multilateral nature.

10.rgem factors and circumstances experienced mentioned, we have given importance and priority to take preventive measures and deterrence that limit the phenomena abuses and irregularities relating to the sale and purchase of foreign currency, and we include below the most important measures:

O.tfiel the role of the Money Laundering Reporting in the central bank's office, was awarded the office for the first time and financial and administrative spatial independence and we have demonstrated our willingness to respond to all the material and human and technical requirements needed by the Office to strengthen and to strengthen its role, has DAI so appreciated by the Financial Action Task Force Organization (competent anti-money laundering procedures).

B.tfiel the role of the National Committee for combating money laundering and terrorist financing, the Commission was able to and the efforts of intense and exceptional preparation of the draft anti-money laundering and smuggling of funds law which was prepared according the latest requirements of international conventions and coordinate directly with the Financial Action Task Force and the World Bank, was to vote on the project in the House of Representatives, will provide law framework organizationally and legally on the high score for its response to the financial criminal activity.
A: intensify efforts with relevant international organizations in order to build an Iraqi capabilities and support expertise and information In order to deal with such serious crimes, and there is an international response and conduct training and rehabilitation operations currently intensively to the staff of the Central Bank and the staff of the banks concerned, as being sought for the introduction of all stakeholders in the fight against (security, regulatory, and judicial authorities chock).

D.alaml on the application of decisions Basel Committee (), where he committed the Central Bank of all banks and the introduction of units of risk management and anti-money laundering, and implementation of the decision to raise banks' capital to 250 billion dinars, in addition to a review of the functions and the rules of supervision and requirements of discipline to improve performance in the credit market and banking.

H.altaaked with company Ernst & Young to audit sell the dollar to banks and firms conversion companies and banking procedures, and identify weaknesses and ways to adjust these processes.
and .altaaon and coordination with neighboring countries on remittances, has recently been the signing of a memorandum of understanding with the Central Bank of Jordan on cooperation, coordination and exchange of information.

Z.alzam banks and conversion companies to submit detailed breakdown of the amounts transferred include all the information required, and the central bank to provide the Office of the Inspector General in the Ministry of Finance, the General Commission for Taxes and Customs Authority with copies of those statements for the purposes of tax settling accounts and follow-up.

c. The central bank was able to eliminate the phenomenon of the so-called (instruments volatile) through the development of technical payments and other measures systems, including forcing banks to stop work by passing instruments after (3) days in the case of non-confirmation system on the availability of credit, and is now being passed any instrument unless gets support the availability of credit regardless of gestation period, and it should be noted that the central bank was able to a few months ago to stop fraud in this regard was the total instruments more than 400 billion dinars, we were informed BSA for some previous cases involving suspicions, and operates Bank Central coordination with the Bureau to investigate any previous operations may involve fraud using public money for private benefit in banking operations, with the offer that the central bank deducted the amount of remittances in Iraqi dinars from the assets of open drains has directly and before the implementation of the transfer and therefore those instruments if he intended (instruments without balance), they coefficients for private banks and banks and government. order to expand and diversify the local production base, thus alleviating the volume of imports and thus reduce the demand for the dollar, after it failed and with regret spending policies of promoting and stimulating domestic production, and were for the most part exaggeration in consumer spending and hence more imports, in order to that, the central bank historic step lend specialized banks and private banks in the amount of 6 trillion dinars to finance industrial, agricultural and real estate projects and small businesses, and if the management of these loans properly, it will be an important base for stimulating activities Economic within the country and create a large production base.

K.tor Central Bank and develops payment systems and clearing instruments electronically and adopt a substitute for clearing handicrafts room for all the government and private banks in Baghdad and the provinces, as well as the launch of the infrastructure for payment systems retail national and divided, and the unification of the security specifications of the instruments drawn on all banks for the purpose of providing greater protection for instruments and reduce fraud.

To Done contract with an international company (Ernst & Young) for the purpose of banks evaluated under System (CAMELS), the company will present results of the evaluation of all the banks in the near future, this assessment provides the central bank and the customers with these banks stand on the conditions of those banks and thus take appropriate action to rectify their status or self-determination. inform the banks and the conversion of the new description of the profession of anti-money laundering and assist the Director, given that these two functions of the important functions of any financial or banking institution.

N.ovi framework deterrent actions , Bank sanctions continue, according to the reports of the field and office inspection bodies through the Commission on the imposition of sanctions, which includes a number of representatives of the formations of the central bank, and point out here that the irregularities that have been diagnosed for the past years with regard to customs permits had been given its importance and priority at our mandate, and on the basis of operations review and diagnose irregularities Council to impose central bank manage large financial penalties of up to more than 15% of the capital of some banks. The central bank does not hesitate to take deterrent measures but strict penalties and fines continuously and did not know as much as her ever seen in the history of the bank.There are also many issues before the courts for a long time.

11.nicom currently an intensive review to determine the conditions of private banks, and for this purpose draw upon assessment of the global auditing firm and we reach the supervisory activity of the Central Bank, especially as some banks suffering from liquidity problems and other offline and Snuaa Commission the results of those efforts.

We retardation Iraq for decades to keep pace with developments in the banking and financial systems developments and keep up with international standards to achieve financial stability and risk management and control mechanisms of the market and the use of advanced technology systems in the operations and transactions management and services.
Obstacles to the Iraqi Central Bank supervision:

take over the Central Bank is currently a high priority for effective control and take important and serious steps in order to raise the level of efficiency and effectiveness of controls on banks and financial institutions but that it usually takes a period of time to build local capacity and provide effective tools for censorship move forward in their construction. The central bank faces serious difficulties in the development of the banking business and the Superintendency of Banks and control so as to a number of reasons, most notably:

O.daf organizational, administrative and technical structure of banks and other financial institutions, which keep away from the limited activities for these reasons, and also to the high risk of granting credit facilities in conjunction with the indifference of borrowers and clients to fulfill their commitments, in addition to the impact of the political and security factors in the business environment in Aamh.oan failure of these banks in the systems internal controls and risk management, including money laundering and financing of terrorism risks, cast it all on the central bank, difficult tasks and great challenges.

B.azov importers follow the letters of credit as a means best in import operations, despite the incentives granted by the central bank to push in this direction, he did not succeed, as traders used since the nineties to this style especially that most of them are small traders who find in the direct conversion of an easy way does not cost them effort, nor subjects them to procedures for tax or other in the absence of the role of the tax authorities.

A: As a result of the above note the prevalence of dealing with cash instead of using the banking system, and extends until the import of commercial transactions, for example, trade with Iran is estimated at $ 8 billion a year, are made ​​through cash transactions. The phenomenon of currency dealing a major obstacle to achieving effective control over all loops. Many of the conversion transactions take place over the phone, where the converter receive a cash payment within Iraq, and delivers the amount in cash to the student transfer in the other country, exacerbated these negatives with the increasing migration of citizens and their money abroad.

D.alqsour and weaknesses of the relevant agencies work of the Central Bank or complementary to its oversight role, particularly in the registration of companies, and import licenses, customs and tax authorities and a combat economic crime, and others.

H.adm availability of data or inaccuracy relating to economic, trade and tax aspects and other national data that will help the central bank in the study, analysis and control.

and. twice the capacity and expertise in the relevant agencies oversight and investigation and the investigation of all formations concerned both within the central bank or in the banking sector or non-bank financial institutions, or other relevant agencies in control devices, judiciary, the fight against crime and economic crimes institutions. Especially that some of the crimes that fall under the money laundering does not hold state agencies experience and base of financial intelligence, financial investigations to deal with it, and has no background in the concepts and practices and judgments concerning those issues, with the absence of a law to accommodate all aspects of money laundering crimes like the one approved by the Council Majara..sbak House of Representatives and the Central Bank granted approval for the establishment of banking offices and up to 2000 license (before we took the assignment), and such a large number is a big burden on the central bank in supervision and control and censorship, especially as these offices are run by individuals and we do not have electronic systems or systems administrative and accounting, regulatory or reliable Aelloukouk out. It relies entirely on the central bank to obtain foreign currency (dollar) because the private sector in Iraq to Aashm in the presentation of foreign currency known and to which we referred above characteristics.

political and security H.aladtrapat which are reflected directly on the overall economic conditions, including investment and savings moving out of the country, with a lack of productive base and unilateral financial resources.

T.daf fiscal policy and that of its manifestations efficiency.

* consumer spending and rent-seeking, which leads to the depletion of foreign currency reserves and does not help in creating a real productive base.
* poor efficiency and legislation the tax system.

* failure of the financial management system and the system of preparation, implementation and monitoring of the state budget.
* lack of flexibility in reducing expenses with revenue increasing difficulty.
Options or proposals on the sale of the dollar
The first option: to restrict sales by:

O.thdid sales ceilings by types of sales or transfers.

B.thdid sales under the documents and documents by every kind of sales or transfers for specific purposes.
Pros: control of the quantities sold of the dollar.


* failure of supply to meet demand, bringing the dollar exchange rate in the parallel market and thus higher prices and increasing inflation.
* achieve obscene profits by middlemen and speculators.
* resorting to fraud and forgery in collusion with the institutions concerned staff operations or through fraud gangs.
* difficult to control and control what necessitated documentation documentary operations, especially since the number of banks more than 50 bank and 30 companies convert about 2,000 brokerage firm (banking offices).
* drain the central bank effort in the audit of those operations and whether they satisfy the conditions and documents, with failure to respond to the relevant state institutions (customs , tax, trade etc ...), and an example of what Such is imposed by Bank of invoices and customs permits and others in 2012 so far is still under scrutiny and correspondence for more than 3 years.
The second option: the restriction partial:
The in:

O.adm request documents or documents for sales operations and conversion of banks and companies with the application of the principle of "know your customer" any verification of the legality of the funds used by banks and companies in conversion and sales operations.

B.takiad quantities sold certain limits by purpose and by level of dollar-denominated imports.


* Relative to control the quantities sold.
* not to involve the central bank and banking documents and documents, customs declarations, and taxes .. and others.
* harmony with the Central Bank Act, which provided for the simple unconditional sale (cash and futures) of the coin foreign as well as harmony with the guidelines of the International Monetary Fund which states have signed it (including Iraq) and which ones not to restrict the sale of foreign currency, but this harmony achieves only part of the freedom of sale (not putting strapped documents the conditions and documents) do not achieve complete freedom in terms of the purposes of conversion (currently Atns instructions to allow the transfer or the transfer of capital or other transfers not provided).
It is also the principle of freedom does not take place or release the conversion roof, as long as the sale under this option is selected a certain ceiling.

* Artvaag exchange rate whenever there is a restriction of the top of the roof of the total sales, and the consequent cons of rising prices and speculation.
* Did not meet the guidelines of the International Monetary Fund, which provided for the non-restrictive and does not respond to the law of the central bank.
* Does not prevent it from fraud and forgery for operations making processes are not permitted illegal developed draft a cover operations, any use of legitimate convertible to cover purposes are not allowed in the instruction addresses.
* it cast on the central bank's responsibilities follow-up and audit to ensure the safety of operations, an effort that exceeds the central bank's ability to reasons for lengthy explanations.

Third option: the launch of the freedom to purchase specific Agad:

This option means:

O.adm determine ceilings for sales operations.
B.laasmah coverage of operations is contained in the central bank selections (such as capital transfers, etc.).


* help to the relative stability of exchange rates.
* Responds to some extent to the guidelines of the International Monetary Fund and the Law on the Central Bank in terms of determining the ceilings.


* leads to higher use of foreign currency reserves.
* Not respond to the directives of the International Monetary Fund in terms of restricting the types of conversions.
* In addition to the other negatives contained in the previous option in terms of fraud and forgery, and the issue of censorship and control.

Option Four: absolutely total quantity and quality.

This option means:
O.adm restrict the quantities and full response to the request.
B.adm restrict the types of transfers.
J.alzam banks and companies applying the principle of "know your customer" to check the legality of the source of the money.


* stability of the general exchange rate stability in prices.
* Prevent speculation and prevent significant differences from the official price and by following cancellation of users and speculators layer.
* Do not drain the central bank's efforts to follow up and check the vast amount of transactions and documents, and only checks the legality of money obliging and control banks and companies from the obligation to verify that.
* full response to the guidelines of the International Monetary Fund and the Law on the Central Bank of the existing economic system and on the basis of the market economy and the law of supply and demand.
* foreign currency reserves drop, which may have a psychological scars rather than scientific or objective, Valahtaati existing unable to respond to the request.
* May encourage more transfer funds abroad or compactness operations in foreign currency.
Option V: exit the Central Bank of sales operations.
Any failure by the central bank to buy dollars from the Ministry of Finance and re-sell it and the Ministry of Finance sold directly through one of the following options:
O.tosas belonging to the Ministry of Company assume sales to retail outlets operations (banks, offices Banking ..), or the direct sale.
B.alabie through its subsidiary banks (Iraq, Rashid, Iraq's commercial ..).
The central bank can purchase which overflows from the need of the market, and the process of pumping of the market when an imbalance in price occurs (increase the exchange rate to the dollar) or buy from the market (when the low dollar exchange rate).


* the departure of the Central Bank for the performance of large and extensive duties, particularly in stimulating economic activity.
* dispel misperceptions about the concept of foreign currency reserves.
* achieve better public sad resources to take advantage of sales commissions and others.
* Cancel the role of the many middlemen and speculators.


* may qualify the International Monetary Fund on it, which requires consultation with them.
* May need to arrangements and approvals from the US Treasury and the Federal Bank of the US, which needs to reassure about the oversight and control of the movement of the dollar in accordance with international and US laws, particularly in the area of the ban on countries and companies and people, and the financing of terrorism, which is being controlled within the control systems and control between him and the Central Bank of Iraq, and this is necessary because the Fed is the one who prepares the central bank in dollars.
* This option requires capacities and capabilities in the Ministry of Finance, taking into account the weakness in the formations building the Ministry of Finance.
* conditions may lead the ministry and the weakness of its experience and resources of dollar decline in this area forced the central bank to inject additional quantities of the dollar to the market and thus lower its reserves.

Sixth option: to raise the exchange rate to the dollar.

Pros: to raise the exchange rate of the dollar could lead to reduced demand for the dollar on the other hand, it adds the general budget amounts higher than charged by the Ministry of Finance is currently replacing the dollar dinar.
* Due to the lack of flexibility in demand for imports due to the absence Qaeda national productivity it will lead to a general increase in prices and high inflation levels.
* Usually resort to this option to promote national exports, which is not applicable to Iraq as an importing country.
* Fold confidence in the local currency and the impact on local and foreign investments.
* The lifting means reducing access by the increase in price, because the household expenditure depends on imports, the increase means a tax undeclared on the entry, and this requires (you) re-examine the direct and indirect taxation because taking the principle of reducing the value of the local currency and the application of taxes also sign serious damage on the purchasing power of citizens.

The tax policy if used correctly are the most realistic and justice, and plays an important role in the redistribution of income without hurting middle and weak layers.
Conclusions: dollar selling process by the Central Bank achieved two

purposes, namely: finance government expenditures (JD) and cover imports foreign remittances.
And that's where the dollar sold comes from the Ministry of Finance (export of crude oil) and the demand for the dollar comes from government spending is the basis, the The central bank can not control the supply or demand, and that the restriction of the sale process lead to a rise in the dollar exchange rate and therefore the general level of prices rising in addition to speculation and profit margins are very high.
We also restrict the sale contrary to the law of the central bank and the guidelines of the IMF, and the law of supply and demand .

On the other hand, that the restriction of sales: as or purpose or both encourages fraud, forgery and corrupt practices, and the depletion of the Central Bank's efforts in monitoring and control, especially with the weakness or corruption of many episodes in the relevant government institutions, as well as other factors cited by study. options is not without its downsides, especially when they intersect with the Central Bank Act or the guidelines of the International Monetary Fund, and it seems that the lack of restriction option: As or purpose is the option closest and the most in line with the law and the principles and the rules and laws of the market, with a focus on Verification of the money sources and to require banks to apply instructions and directives of the Central Bank in relation to the fight against money laundering and terrorist financing, in addition to the activation of measures to combat money laundering and terrorism financing law, inclusive of activating the role of agencies and institutions concerned.

3.lal crucial matter in the report of the procedures, instructions and controls is the resolution of opinion on capital transfers abroad, which the central bank does not currently include them in the permissible purposes for the purposes of foreign exchange, as the migration of funds abroad wide phenomenon dictated by the conditions experienced by the country, and with the absence of a legal conditioning settled upon resort of banks and companies to buy dollar caps are permitted such as import, for example, which signed the Warning and irregularities and holds the central bank also effort is abnormal in the audit and review processes especially in the banking sector and financial suffering from failure of many problems and the presence of large numbers of banking licensed and non-licensed offices. international reserves in The central bank is currently the appropriate level of competence, and according to the criteria adopted, and can meet the demand for the dollar even with the decline in revenue from the dollar and may be sufficient for many years to come, (with the survival of other factors constant).