Why the Fed Sends Billions of Dollars to Iraq

Why the Fed Sends Billions of Dollars to Iraq

By Emily Glazer and Jon Hilsenrath
Nov 3, 2015 2:07 pm ET

Why is the United States sending billions of dollars in cash to Iraq?


It’s complicated, but it’s actually Iraqi money.

The Central Bank of Iraq, along with many other countries’ central banks, have accounts with the Federal Reserve with their own U.S. dollars. The money in Iraq’s account comes largely from oil reserves — not money the U.S. is giving to the country for assistance or otherwise.

The Wall Street Journal reported in a front-page article Tuesday that the Fed and Treasury Department temporarily shut off the flow of billions of dollars to Iraq’s central bank this summer as concerns mounted that the currency was ending up at sanctioned Iranian banks and possibly being funneled to Islamic State militants. The previously unreported move to stop the cash shipments pushed the Iraqi financial system to the brink of crisis and marked a climactic moment in efforts to avert the flow of dollars to U.S. foes.

An estimated half to two-thirds of the $1.3 trillion in paper U.S. currency in circulation goes outside U.S. borders, according to the Federal Reserve and U.S. officials. Among the Fed’s jobs is providing the currency to institutions with dollar holdings—both inside and outside the U.S.

Foreign central banks hold dollars and can call on the Fed for distribution of the currency in paper form.

“The Federal Reserve seeks to accommodate other countries’ need to have access to their dollar deposits in the form of U.S. bank notes for legitimate purposes,” a Fed spokeswoman said in a statement. “A number of central banks around the world, including the Central Bank of Iraq, maintain accounts at the Federal Reserve Bank of New York and at times withdraw currency from their accounts.”

The spokeswoman added that the Fed works closely with the Treasury Department “to ensure central banks comply with laws prohibiting transactions with sanctioned foreign regimes, terrorists, and international narcotics traffickers.”

“Iraq needs the dollars, law-abiding Iraqi citizens and businesses,” said Daniel Glaser, assistant secretary for terrorist financing in the Treasury’s Office of Terrorism and Financial Intelligence, in an interview. “What we’re trying to do is make sure they get those dollars but also put into place safeguards to make it harder for ISIL to get them.”

When Iraq needs more paper currency, the money is drawn from the country’s account at the Federal Reserve – funded largely by oil reserves — and flown to Baghdad.

The brand-new $100 notes are flown on chartered airplanes to Baghdad after leaving a Fed facility in East Rutherford, N.J.  In Baghdad, the bills are moved by armored vehicles to the Iraqi central bank, where they are sold in daily auctions in which Iraqi financial institutions request dollars that they pay for largely using dinars, the local currency.

The process doesn’t involve competitive bidding, but instead the money is generally distributed as demanded. The Central Bank of Iraq pays for this distribution, which can cost millions of dollars alone given the security measures involved, people familiar with the process said.


http://blogs.wsj.com/moneybeat/2015/11/03/why-the-fed-sends-billions-of-dollars-to-iraq/

I spotted an interesting tidbit there that really has nothing to do with the article but a LOT to do with any mythical "RV" possibility, probably would have been easy enough to have looked it up but it just hadn't occurred to me to do so.

"An estimated half to two-thirds of the $1.3 trillion in paper U.S. currency in circulation"


Ok, 1.3 Trillion United States Dollars in paper currency in circulation, let's look at what that means.

There is no doubt that there is well over a Trillion Dinars in the hands of American "investors" alone and does not even include the rest of the world's scam victims. So to "RV" to a 1 to 1 exchange rate would require every single piece of paper in the world with Dollars printed on it! To be fair it must be considered that payout to Dinar holders would not require paying in physical cash but STILL it clearly illustrates the total absurdity of the whole "RV" idea! In order to "RV" at 1 to 1 Iraq would have to pay out of their reserves an amount equivalent to every single paper Dollar in existence just to American holders and even that probably would 't be enough since it's quite likely that there is more than 1.3 Trillion Dinars held in this country, remember that Sterling alone did well over a half a Trillion in business with the bulk of it in Dinars.


The whole idea of the "RV" just gets more absurd every time we look at it.