The independence of the Central Bank of Iraq; CBI of al-Basrah outline

The independence of the Central Bank of Iraq (1-3-11)

Zuhair Ali Akbar / General Manager, Central Bank of Iraq branch of al-Basrah

Introduction:
Has issued Law No. (43) for the year 1947, which was established under which the National Bank of Iraq with a capital of five million dinars, and thus to not be Iraq’s first Arab country to the foundations of national banks to issue currency and control things cash, but is established starting point in the development of the monetary system of the Iraqi regime dependent, to a system independent monetary and Article X on the relationship of the Governor to the Governing Council on the one hand, and the independence of the board in matters affecting the financial policy of the State on the other hand.

On 06.06.1956 Council approved the Iraqi nation to switch the address list of the Iraqi National Bank Act to the list of the Iraqi Central Bank Law and the dissemination of the Official Gazette the name of the Iraqi Central Bank Law No. (72) for the year 1956 On 01/07/1956 The main duties of doing business resulting from the international conventions related to economic affairs and Chirvip and control of foreign exchange control of banks and to coordinate their work and determine the upper limits of interest rates charged by or paid by banks in its Chirvip and intermediary financial institutions and to provide advice to the Government in all matters affecting the development of the Iraqi currency at home and abroad impact “direct” or is a direct and carry out transactions of government loans and quasi-government of all kinds and keeping the government’s accounts, including semi-government departments of all kinds.

On 29.05.1976 the Revolutionary Command Council issued a (defunct) Central Bank of Iraq Law No. (64) for the year 1976. On 07.07.2003 issued the Administrator of the Coalition Provisional Authority Paul Bremer Order No. (18) Measures to ensure the independence of the Iraqi Central Bank of Iraq in three paragraphs is the first part (loans provided to government ministries), a suspension of Articles 21 and 22 of the Code of the Iraqi Central Bank No. 64 for the year 1976.

The second part (the central bank adjusts monetary policy and credit policy) Comment Article (14) from the Iraqi Central Bank Law No. (64) for the year 1976.

And Part III (entry into force) it enters into force and become effective as from “the date of signature.

This brings the law No. (56) for the year 2004 the Central Bank of Iraq is the law in force and effect and which applied to the bank all the paragraphs and legal materials and in particular Article (2) of it (the legal status and independence) and in particular paragraph (2) thereof, namely:

Enjoy the central bank independence in the pursuit of its objectives and the performance of the tasks entrusted to it, and be subject to accountability by, as provided in this law, does not receive the CBE instructions from any person or entity, including governmental entities unless the law provides otherwise and we must respect the independence of the Bank central and not seek any other person or entity to influence illegal for any member in a central bank concerned bodies to take decisions to intervene in the performance of its duties towards the Central Bank to intervene in the activities of the Central Bank.

The idea of central bank independence from the state check every day to step forward, especially thanks to this law.

The emergence of central banks:

They were to secure funding for the Treasury King is the reason behind the establishment of the first central banks in the world was founded Sweden’s first central bank in history Rijs bank in 1668 in order to secure funding for the state in return for the privilege of issuing currency and for the same reason founded Britain is the second central bank year 1694, a private company established by royal decree for the funding of Treasury money-hungry king during his war with Louis XIV was awarded the new bank in return the right to issue currency.

But the First Consul Napoleon Bonaparte founded the Central Bank of France in January 1800 up to the other face of the recession that prevailed in France during the revolutionary years.

Netherlands and founded the De Nederlandshe Bank was established in 1814 and Austria 1816 edition of Foundation and was created the National Bank of Belgium in 1850 and the Bank of Japan founded in 1882 and Italy in 1874 and founded the united Germany Reichsbank in March 1875.

He acknowledged the U.S. Constitution in 1787 the principle of the unit of currency in the country and Congress mandated the task of issuing cash value of the system and the organization of the Federal Reserve in 1913.

And the Swiss National Bank in 1907.

The evolution of central banks:

Because of the unique location of the central banks resulting from the privileges granted to them by the State have come together to have reserves of banking institutions have become commercial banks resort to central banks for liquidity as unable to be found from within the banking system have on the bank of the Central Bank to the banks in addition to His missions parent institution LAUNCH Bank and government.

That the most important international movement in the present direction of central bank independence are those that resulted from the agreement Master Liszt of the European integration, signed on February 7, 1992 has identified this Agreement in three phases to complete economic and monetary union begins the third and last of them in a time period January 1, 1999.

According to the agreement to create a unified European currency and a European system of central banks is composed of the European Central Bank and national central banks of member states.

Treaty stressed the independence of the Master Liszt European Central Bank and central banks of member states, assigned to several articles of the board for this purpose that is very focused on the European system.

Central banks is to achieve price stability and ruled that enable it to develop fiscal targets and implement policies independently and to this end, summed up the treaty rulers immunity tough in the face of national authorities and the Federal stipulating that their mandate should not be less than five years and prevented the dismissal before the expiry of their mandate surest strict conditions.

The objectives of the Central Bank:

Article (3) of the CBI number (56) for the year 2004 (The main objectives of the Central Bank of Iraq in achieving domestic price stability, maintaining and promoting a financial system based on market rules and a stable and competitive and to maintain the system and taking into account these objectives The central bank also is working to achieve growth, employment and prosperity in Iraq on the basis of a viable).

In article (4) of the Act above note breakdown of the functions contained in Article (3) above.

The goal of monetary policy is to help achieve the economic goals of the country, most notably the four economists have agreed to call it (the magic box), the economic growth, full employment and price stability and external balance of payments.

Monetary policy is the responsibility of the Central Bank and not the responsibility of Government or the Ministry of Finance or any other organ of the state and therefore not entitled to the government to intervene in monetary policy or to dictate to the Central Bank policy directions that should be adopted.

Central Bank of Iraq is the sole gatekeeper of the Iraqi dinar under applicable law and at the same time must be on each central bank, no matter how independent “that takes into account the general economic policy of the Government and provide them with support and assistance which is consult a permanent basis between the Bank and the government on policies to be followed even if The law provides for such consultation.

On 03/13/2010 we had a meeting with the Ambassador of Federal Republic of Germany in the presence of the elders of the city of Basra, a ship of peace on the banks of the Shatt al-Arab, where I mentioned to him that there is a similarity between the German mark and the Iraqi dinar both fought wars and pay the price for very high prices to inflation every three 09/04/2003 thousands of Iraqi dinars, equivalent to one U.S. dollar after it was every single Iraqi dinar equivalent of three dollars and ten cents before the year 1990 before the imposition of economic embargo on Iraq as a result of the second Gulf War and Iraq’s entry into the State of Kuwait.

Central Bank of Germany (item Sapanca) and a success exciting for this bank is in its ability to use the History teaches in order to build upon its independence and in order to make the public guardian trustee of such independence and looked out for the maintenance of any violation has succeeded item Sapanca always remind the German pages inflation black ravaged their country during the twenties of this century and urged them not to forget Omtholadtha time.

The fact that the German people, who paid a “heavy price” of the waves of inflation surges in the era of its history Trabh those painful memories, a fear that repeated and destroying its economy and its currency national new so, it is item Sapanca guardian of Mark and trusted “on its value in the face of risk, especially those that produce government policies wrong, turning public opinion to the fence that protects the independence of the Central Bank in the face of the state and its institutions.

Thus, the independence of the item has become the Sapanca (legendary) and the most obvious and important forms of independence in the whole world, especially before the signing of the Maastricht agreement even become the consensus of researchers, politicians and economists symbol “and a measure of” global central bank independence.

In most Arab countries laws note the legislation does not recognize the independence of the central bank from the government, except in rare cases such as Lebanon and Iraq today under the law No. (56) for the year 2004.

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