The central bank clarifies regarding foreign reserves in it and the fact that it is a surplus invested abroad

6/27/2020 14:14


[Baghdad_Eye] The
Governor of the Central Bank of Iraq, Ali Al-Alaq, explained about the foreign reserves in the bank and the fact that it is a surplus invested abroad.
Alaak said in a statement, about what some are deliberating regarding the uses and concept of foreign currency reserves(cash, deposits, bonds, gold) with the central bank, that "unfortunately some people understand the foreign reserves of the central bank as a surplus invested abroad."

He added that "the real financial surplus the government has from surplus funds that it invests in a variety of forms such as sovereign funds, investment funds, generational funds, etc. ... As for the reserves with the central bank, they correspond to the dinar issued to the government or others, it is a cover for the local currency and it should not be less than a specific level of adequacy. According to international principles, otherwise the value of the local currency (dinar) will collapse, as happened in the previous system.

He continued: "As for how the reserve is managed in terms of the type of currencies and the type of instruments, they are governed by internationally recognized rules and in all central banks, and we follow the same rules and in the subject are complex and broad technical details."

He added: "It is worth noting that when the government borrows internally, it is tantamount to withdrawing from foreign reserves because the dinar that it borrows is pumped into the market and turns into a demand for mostly imported goods and goods and the payment of foreign liabilities, which (the government) does not put in exchange for a dollar, which leads to the withdrawal and reduction of reserves Foreign. "