The Central Bank of Iraq is the monetary authority of Iraq, being the institution in charge of ensuring the monetary stability of the aforementioned Arab country.
In other words, the Central Bank of Iraq is the entity that directs Iraqi monetary policy. Its headquarters are in Baghdad and it has branches in Basra, Mosul, Solinania and Erbil.
Objectives of the Central Bank of Iraq
The objectives of the Central Bank of Iraq are the following, according to its official website:
- Ensure price stability internally (of Iraq).
- Promote a stable and competitive financial system.
- Promote sustained growth, employment and prosperity in the country.
The functions of the Central Bank of Iraq are as follows, according to official information:
- Implement monetary policy and exchange policy.
- Manage international reservations.
- Manage the country’s gold reserves.
- Issue and administer the Iraqi currency (the dinar).
- Regulate the banking sector, granting permits and supervising banking entities as indicated in the law.
After World War I and the dissolution of the Ottoman Empire, the British occupied Iraqi territory and administered it through a system called the Mandate. This, until 1931.
Thus, in 1931 the Iraqi Currency Board was established in London to issue the new Iraqi dinar, which maintained a peg to the pound sterling.
In 1949 the Currency Board was replaced by the National Bank of Iraq. This entity had been founded two years earlier, in November 1947. In 1956 the National Bank of Iraq became the Central Bank of Iraq.
Another milestone occurred after the fall of Saddam Hussein’s regime. Through the Central Bank of Iraq Law of 2004, the Central Bank of Iraq was established as an independent entity. This, with an authorized capital of 100 billion dinars.
The idea of the new law was to provide the Central Bank of Iraq with a regulatory framework in accordance with international standards, seeking to give confidence in the Iraqi banking system. This, given that the country was emerging from an authoritarian regime that had nationalized the oil industry.
At this point, we will make a parenthesis to recall the well-known episode that occurred in March 2003 when one of Saddam Hussein’s sons would have withdrawn around a billion dollars from the Iraqi monetary authority. According to media such as El País in Spain, the money was withdrawn in vans carrying sacks full of bills.
It should also be noted that the Iraqi Constitution recognizes the monetary authority as an independent institution.