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The difference between the mandatory reserves of banks and foreign assets

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The difference between the mandatory reserves of banks and foreign assets

9/3/2017 11:11:00

The difference between the mandatory reserves of banks and foreign assets

There is a large mixing too much "in the media between the concepts of reserves banks must retain staff and counting by a certain percentage of their deposits and Bank called" (legal Reserve), the concept of foreign assets (Foreign Assets) held by the Central Bank which is used and invested to meet the requirements of the national economy,

the Central Bank, for example, to use part of it to cover the import needs of the private sector, as well as "about citizens' needs for travel and religious tourism, medical treatment, and a study on private expenditure outside Iraq, in addition to paying the salaries of Iraqi retirees living abroad because of Iraq known as the Central Bank has cut the mandatory reserve deposits of banks and not a reduction of foreign reserves.

The Ministry of Finance of Iraq is the only source of foreign currency, which control the display, so the display is that determines the price on the parallel market in light of a certain level of demand, when the Central Bank determines this price it takes into consideration that ensures Iraq equivalent of foreign currency so as not to depart from the official price teller price dramatically.

As the current crisis in Iraq and of low oil prices and the lack of financial return, and the confrontation with ISIS expenses thrown astray on the exchange rate, however, has kept the Iraqi Central Bank foreign exchange reserves, and the market price by another,

note that there are no other foreign currency earnings as returns on investment and tourism revenue and non-oil exports due to the fact that non-Iraqi investment environment attractive right now,

"the lesson is not in decline these reserves because Chesher In the above, but the inability of the Central Bank that got into the import needs of the private sector, and cover the necessary needs of citizens of foreign currency.

However, the Central Bank of Iraq in 2016 to reduce the cash reserve ratio (compulsory) imposed on bank deposits (15%) (10%) and use the amount of the discount for important purposes are to improve the liquidity of the banking system in General, and small loans to develop the Iraqi economy, tackle unemployment."

Finally, the main goals of the Iraqi Central Bank's monetary policy is price stability, and work to maintain a stable financial system based on competition in the market, and the promotion of sustainable development, employment and prosperity in Iraq.

PUKmedia/Acer Jabbar

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