Iraq recently stopped all bank deals using Chinese yuan, which has affected the country’s money matters. This move comes after pressure from the United States, showing the complex global politics at play in the country’s economic policies.
The Central Bank of Iraq (CBI) announced this big shift in its financial operations, citing worries about possible manipulation and issues in certain transfers.
This decision greatly changes how the country handles international money and deals with big global economies.
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Future of Chinese Yuan in Iraq’s Currency Basket
Reasons Behind the Suspension
Iraq did not take the suspension of yuan transactions lightly. Moeen Al-Kadhimi, a member of the parliamentary finance committee, revealed:
“Iraq has chosen to stop using the Chinese yuan in financial transactions due to worries about possible manipulation and other problems with certain transfers. The decision was made following an order from the US Federal Reserve, citing issues with transactions.”
This statement shows the big money problems the country faces and what the Central Bank is doing to fix them.
How Will This Affect Iraq’s Financial Sector?
Experts expect the suspension of yuan transactions to affect the country’s financial sector greatly. Previously, Iraq had been boosting its balances in yuan currency through the Singapore Development Bank to fund trade with China, amounting to about $12 billion yearly.
Ali al-Allaq, Iraq’s Central Bank Governor, provided more insight:
“The recent decision to stop Iraq’s transactions in Chinese yuan was influenced by concerns over possible manipulation and transaction issues. We are currently addressing the requirements related to Iraqi banks that have been restricted from dealing in US dollars.”
This statement shows Iraq’s money troubles and how the Central Bank plans to fix them.
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Central Bank of Iraq’s Response
The CBI is now working to fix these problems. The finance committee wants the CBI to use more types of money, giving Iraqi businesses more choices. This change could help Iraq deal with the yuan problem and avoid similar issues later on.
Looking Ahead
The future of the Chinese yuan in Iraq’s currency basket remains unclear. While the current suspension presents challenges, the country can explore other financial arrangements.
Iraq had started using more UAE money and was trying to use more euros for EU trade. Now that yuan deals have stopped, the country might move faster on these plans, changing how it handles money with other countries.
Banking transactions in Iraq are undergoing significant change. As the country navigates these changes, the financial sector will likely see further adjustments to ensure stability and compliance with international economic rules.
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Iraq stopping yuan deals due to US pressure is a big moment in its money history. As The country deals with these issues, experts and leaders are watching closely to see how it will affect its future money and global trade.