Currency window and return scarcity
Author: Yasser Metwally
20/6/2018 12:00 am
The financial crises that hit the countries of the world without exception are many and their effects varied between state and another depending on the hedges and actions taken by the monetary authorities and the executive bodies of the government to counter these effects and try to overcome them or reduce the effects of pain.
Perhaps most of the economies of the world are concerned about the storms of these crises, which occur from time to time, so that all concerned parties, especially the monetary policy and those who are represented by central banks are dedicated to avoid the adverse effects of the financial crisis in a particular country, and to talk.
This introduction was marketed after the emergence of a crisis of liquidity may be exposed to private banks felt by the Association of banks as a result of the inevitable and expected, because the dollar and the likelihood behind these fears.
Two months ago, she warned that there would be an impact on banking activity because of the stability of the dollar exchange rate at the same border with the parallel price in the market, which will cause a reduction in the rate of return "profits" obtained by banks.
Since most banks have relied entirely on the currency window in the fulfillment of all their obligations and various expenses on the volume of return, was alert that the situation foreshadowing the possibility of the collapse of some banks and their loss and exit from the market.
And it seems that the continuation of the exchange rate at this limit has been affected, and that these risks have stimulated the Association of Banks to search for the means that work to continue in the market, and as one of the most important duties of the Central Bank of Iraq to hedge any potential crisis may urge banks, To hear the views and proposals of the Association on them and based in light of the conditions of banks and what passes by to be a solution at hand.
All the measures are possible and available to the central bank to rescue banks from the risks and tribulations; but the question is more important to what time periods can the central bank, and when exhausted all the means available to the central what to do?
In this case, banks should reconsider their activities and products in order to remain in the market.
Otherwise, the situation foreshadows the collapse of banks that can not arrange their positions.
This calls on banks to act quickly to avoid the causes and effects of potential crises by returning to income-producing banking products and not relying on the currency window forever.
The banks are also invited to take into account the objectives of the Association in cooperation with the Central Bank behind the adherence to the program of financial inclusion and try to make the most of the revenues that may enrich them in the future revenues of the window even though less but do not allow to leave the market.