Float banking solution to the Iraqi money crisis

Posted by Economic news editor
Date: May 17, 2017

Baghdad / Private NeniraQ

Reports issued by some of the financial institutions and critical money locally and internationally signals that the reserves of foreign currency in Iraq fell to only $ 40 billion !! In the first quarter of 2017 after it was in early 2014 more than 88 billion dollars.

This indicator needs a serious pause and deep research to diagnose the imbalance and find quick solutions before entering the Iraqi economy in the midst of a new cash crisis, noting that the government is clinging to this economic news.

In this regard, financial and economic experts suggested forming a crisis cell to discuss solutions

There are a number of solutions when there is a depletion of hard currency, including:

1 - float currency, a very difficult option to apply in Iraq now.

2 - Canceling the auction of the currency (the Great Blast).

3. Re-activate the control of financial transfer.

4. Limiting borders and preventing organized smuggling through the activation of the Tariff Law.

5 - Adoption of documentary credits in the import operations instead of selling the currency to traders.

6. Restructuring and privatizing losing companies in the industrial sector. And benefit from hard currency caused by privatization.

7 - Attempt to gradually disengage between the Iraqi dinar and the dollar and link the national currency to a basket of currencies and this action needs a political decision and national will
And other solutions and plans but need to be properly diagnosed and worked hard by forming a crisis cell to discuss it.

The appearance of Mohammed Saleh, financial adviser to the Prime Minister has proposed the establishment of a bank to finance the trade of the private sector contribution of commercial banks (all governmental and private) and specializes in the function of opening documentary credits syndicate to finance foreign trade to the private sector, similar to the Iraqi Bank for Trade, which finances government imports by opening credits Documentary.

Pointing out that the Central Bank of Iraq supports the proposal as well as the Ministry of Commerce and the Ministry of Planning, so as to impose a situation in the operation of foreign currency / wholesale operations, with the availability of strategic partner in the administration and be a global bank high credit rating,

"The bank is formed by a license from the Central Bank and the Ministry of Commerce as a joint stock company and practices international banking on a high basis of governance, which separates management from ownership and an independent board of directors. Wishing that the work will be on the formation of this entity international banking organization high-level.