Controls for the first phase of the project (transfer of liquidity between banks)

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Central Bank of Iraq

Department of Financial Operations and Debt Management



Phase 1 controls

Of a project

(Inter-bank liquidity transfers)





Introduction: -

In order to maintain the stability and stability of the financial system in general and the banking system in particular

Iraq, especially after the stability of the exchange rate of the Iraqi dinar against the dollar in the markets and the decline of the gap

And to continue to provide new financial products that help and stimulate all banks

To deal with the goal of monetary policy in the use of quantitative tools to control the supply of money from

And opening new avenues to invest surplus funds in some banks on the other hand have been activated

The draft liquidity transfers between banks, and this project is the first step to prepare for the activation of the money market

Between banks in the future, especially if any risks, although very low resulting from the transfer mechanism will be

Borne by the accounts of the transfer process and the Central Bank of Iraq as the body that will adopt the process

Transport in the first phase of the transfer.

Based on the provisions of Articles 3 and 4 (e) and Article (28) of the Central Bank of Iraq Law

(No. 56) of 2004, Banking Law No. 94 of 2004 and Islamic Banking Law No.

(43) for the year 2015, and after the approval of the draft liquidity transfers under the decision of the Governing Council of the Central Bank of Iraq

No. (3) for the year 2019 in order to complete the efforts in providing new financial products to correct the banking work

Diversify financial instruments and stimulate banks to cooperate and benefit from the cost of alternative opportunities

Issuing liquidity controls between banks.

Scope of implementation:

The implementation of the draft liquidity transfer between banks as of March 2019 includes Cal

(Both Islamic and conventional) and separately

Legal reference: -

The Law of the Central Bank of Iraq No. (56) of 2004 and the Banking Law No. (94) for the year

2004 and the Islamic Banks Law No. (43) for the year 2015, the Securities Market Regulations and all laws

Related to the Republic of Iraq as well as the decisions of the Board of Directors of the Central Bank of Iraq and circulars

Issued by the Governor of the Central Bank legal reference for the draft liquidity transfers between banks.

Terminology: - The following terms mean the meanings given to each of them and what is mentioned in the controls

maintenance.

 The Bank: - The Central Bank of Iraq.

 The conventional bank: - The word bank and in accordance with the provisions of Article (1) of the Banking Law No. (94)

For the year 2004 "means a person who holds a license or a permit under this Law to conduct banking business

In a governmental company established in accordance with the Law of Governmental Companies No. (22) for the year 1997 amended.

• Islamic Bank: - The bank established in accordance with the provisions of the Companies Law No. (21) of 1997

And the Public Companies Law No. (22) of 1997 and the Banking Law No. (94) for the year 2004






Its Memorandum of Association and its Bylaws shall be bound by the obligation to exercise the banking business which is permitted without interest or interest

And in accordance with the form of banking transactions that do not conflict with the provisions of Islamic Shari'a, both in terms of acceptance

Deposits and other banking services or in the field of finance and investment as provided for

Article (1) of the Islamic Banks Law No. (43) for the year 2015.

 Transfer of liquidity between banks: - a process of transferring liquidity from banks with surplus to banks

With the intervention and supervision of the Central Bank of Iraq to exercise its functions in support of stability

Banking sector, as liquidity surpluses will be invested in banks to finance temporary deficits

In the liquidity of banks with disabilities, and therefore will be subject to all operations conducted within the process

Transfer to the control of the Central Bank of Iraq.

• Disability units: - Banks that suffer from a temporary shortage of liquidity and that apply for funding

In order to maintain the continuity of its banking activity and face emergency settlements) and does not include banks

(Distressed), and are funded under the supervision and control of the Central Bank of Iraq.

 Surplus units: - Banks with surplus liquidity that invest these surpluses

Securities issued by the Central Bank and treasury bills.

 Guarantees: - Financial assets that are pledged against financing (liquidity transfers) such as guarantees

Cash in different currencies and which are considered to be insurance reserves are duly booked (either financial guarantees)

(Government securities and securities issued by the Central Bank of Iraq), and guarantees

Either inside the system or outside the system as follows:

A- Guarantees within the system include all securities issued through the depository system

Central Securities Commission (CSD).

B. Guarantees outside the system include all government securities issued outside the system

Central Securities Depository (CSD).

Steps to implement liquidity transfers between conventional and Islamic banks:

The Central Bank of Iraq shall at this stage be the holder of the decision to grant liquidity after it has been authorized by

(Conventional and Islamic) banks under the relevant contracts.

B- The guarantees provided by banks that suffer from temporary shortage of liquidity will be approved.

C) Banks with temporary shortfalls in liquidity shall request the financing which includes the required amount of liquidity

The repayment period shall be accompanied by a copy of the budget on the date of the request

Department of Financial Operations and Debt Management to study and analyze the status of the bank based on indicators

And to determine the appropriateness of the required liquidity with the Bank's position.

(D) If the Bank fails to meet one of the five approved criteria, the approval of each of the following shall be required

(Director General of the Department of Financial Operations and Director General of the Banking Supervision Department) on the grant decision or not

If the bank fails in more than one criterion, the Governor's approval of the grant decision will be obtained

According to the mechanism of liquidity transfers between banks.



C - Field inspections are carried out by the Department of Banking Supervision to verify the accuracy of the data provided
In which the Bank's position is analyzed at the request of the Department of Financial Operations and Management
Religion.
H- After approval by the Credit Analysis Division of the Department of Financial Operations and Debt Management for a process
Liquidity Transfers Liquidity will be required to carry out liquidity transfers and will have options listed
As follows: -
1. Guarantees outside the system: -
The central bank will transfer the required amount to the bank account requesting liquidity and open
(Before the maturity date of the collateral)
Giving a directive to the bank requesting the liquidity indicates near maturity.
2. Guarantees within the system:
• Repo mechanism on the CSD system (repurchase agreement) and the process will be at a certain price determined before
Central Bank of Iraq.
 Mortgages are different on the CSD system,
(Central Bank of Iraq).
 Trading between banks on the trading system, enabling the introduction of the banking sector as a buyer
According to the price of supply and demand.
The bank accounts will be separated from Islamic banks and conventional banks to avoid confusion
Money.
D- At the end of the year,
Depending on the type of securities held by the bank and the type of collateral provided by the bank.


Department of Financial Operations and Debt Management






Claud (Moose)