Wed, 08-16-2023, PM 5:36 Karrar Al-Asadi 270
The Governor of the Central Bank of Iraq, Ali Al-Alaq, said on Wednesday that
his country has made great strides in applying restrictions on the supply of the US dollar,
but it is facing an uphill battle in light of a banking system that is not accustomed to strict control and currency smugglers sticking to their activities.
"It is really a battle because the beneficiaries of this situation and those affected (by the new measures) will try in various ways to continue their illegal activities," he added in an interview with Reuters.
Al-Alaq did not mention Iran by name, and said that
he did not have data on the volume of dollars smuggled from Iraq to Iran or any neighboring country, including Turkey and Syria, before the United States tightened the rules in November 2022.
US actions aimed at imposing sanctions on Iran are a sensitive issue in a country that has long been on the front line of the rivalry between Washington and Tehran. Al-Alaq said
Iraq's reserves are more than $100 billion,
but he cannot intervene freely in the market to lower the exchange rate due to the restrictions.
Last month, US officials said the US Treasury and the Federal Reserve blocked 14 Iraqi banks from conducting dollar transactions as part of a broader campaign to smuggle dollars into Iran through the Iraqi banking system. Al-Alaq said that
the transactions that led to the sanctions took place in 2022, before the launch of a new platform aimed at improving transparency.
The Iraqi Central Bank also imposed stricter regulations on dollar transfers, requiring dealers to enter an online platform and provide detailed information about the final future of the transfers. He added that
the central bank was conducting a review of the banking sector and would implement new regulations and rules that he said would likely see some banks closed.
"It will be very normal in the coming period to see a decrease in (the number of private banks)," he said. He said,
"There are always side effects,
but at the same time we have a responsibility to protect the country's interests by trying to find the necessary means of monitoring and oversight so that we do not expose the country to any issues on this front."