Central Bank: Iraq to restrict all internal transactions to dinar next year, instead of US dollar

Iraq’s central bank says the country will restrict all its internal commercial and other transactions to the Iraqi dinar instead of the US dollar as of next year.

Governor of Iraq's Central Bank Ali al-Allaq was quoted by Iraqi News Agency (INA) as making the remark in a Sunday meeting with the heads of the boards and authorized directors of the banks licensed in Iraq.

"The coming year will witness the restriction of internal commercial and other transactions to the Iraqi dinar instead of the (US) dollar, except for those delivered to travelers,” he said.

The official added that the measure was aimed at “controlling the general level of prices and lowering the inflation rate, which is a basic indicator of the effectiveness of monetary policy.”

Al-Allaq said “the new system of external transfer and sale of the US dollar” was meant to combat money laundering and financing of terrorism, and was also aimed at facilitating direct relations between Iraqi banks and their international counterparts."

The end of US dollar hegemony draws near

The days of US dollar hegemony appear to be numbered as multiple countries have adopted alternative currencies to the US dollar for international transactions.

The new development came as the global drive toward de-dollarization rages on unabated amid growing efforts by different countries to ditch dependency on the US dollar and trade with their own national currencies.

US Treasury Secretary Janet Yellen said in the middle of June that Washington should expect a gradual decline in the dollar's share of the global reserves, as the global de-dollarization move gains momentum.

"We should expect over time a gradually increased share of other assets in reserve holdings of countries — a natural desire to diversify," she said.

US must expect gradual decline in dollar's share of global reserves: Yellen

US Treasury Secretary Janet Yellen says Washington should expect a gradual decline in the dollar

Yellen acknowledged that the use of sanctions has motivated some countries to look for currency alternatives.

At present, all indicators show that the amount of US dollars held in reserves by non-US central banks has fallen to its lowest level.

The weaponization of the US dollar in addition to the imposition of US sanctions on perceived adversaries have made other countries wary of utilizing the greenback in their financial transactions.

As a result, countries like Russia are moving towards the elimination of the dollar altogether, while China and other major Asian economies, including India and Malaysia, have declared their support for such de-dollarization projects.

India, UAE sign deal to use national currencies in bilateral trade, ditching US dollar

India and the United Arab Emirates sign an agreement to implement bilateral trade in local currencies instead of the US dollar.

The BRICS group of nations -- which includes Brazil, Russia, India, China and South Africa and expanded its membership by admitting six more countries earlier in August -- has been discussing the development of a BRICS-specific multilateral wallet and currency.

Iran has also abandoned dollar trade with China and Russia, while Saudi Arabia, a key OPEC member, said it will completely give up PetroDollar and will start accepting PetroYuan.

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