The source added in a statement during the economic session, about the role of banks in the economic reformation process, held in the Ministry of Industry and Metals that Iraqi Central Bank is working fast to take an active role in the economic stability process in the country. The Bank is trying to dispense with some of mechanisms that were prevailing during the time of the ex-regime, especially lending governmental institutions. Therefore, there are serious studies about the possibility of starting and developing a governmental exchange market that will provide all institutions with cash fluidity as fast as possible. In addition, this will enable individuals and capital owners to find new types of guaranteed local investments and limit their running away outside the country.
The same source declared that Iraqi Central Bank is fully independent. It is exhorting great efforts to achieve a stable financial policy that will enhance Iraqi economy and rebuild it through several constructive steps.
The most important step among them is replacing the national currency. Old Iraqi dinar currency was replaced on the 14 of January, 2004 through substituting 4 trillions of old Iraqi dinars by a new currency. The step had many advantages which greatly regained trust in Iraqi dinar and improved the exchange rate. The late approval to grant licenses to foreign banks is another important step to build an active and competitive banking sector in Iraq. In addition to holding a daily auction of foreign exchange for Iraqi Central Bank. The main purposes of this auction are to reduce extreme changes in the exchange rate which may happen suddenly.
The Bank, also, legislated a new law that gives it: complete legal independence, clear authorization to work on achieving stable prices and active monitoring authorities. It started utilizing the open market processes through selling and buying the treasury transfers in order to control economic fluidity and stabilize the exchange flow. The Bank approved a new law concerning commercial banks and this is a main step towards establishing a financial system works according to the criteria. Iraqi law of commercial banks will enhance the Iraqi trade and release the interest rates.
The complete and full release of interest rates on local financial devices (goods, deposits and exchange) is already operative. The bank considers this procedure as an important step towards the emergence of an efficient contemporary financial sector enables loan borrowers to make up their own decisions in stead of being chained by the instructions issued by Iraqi Central Bank.
The bank is now applying several projects. The most important of which is: the reframing and re-qualifying of governmental banks, applying a serious monitoring system and developing the local one, creating a complete united statistical work that covers all main sectors and finally starting a governmental exchange market.(Source)Al-Sharq Al-Awsat