Baghdad-INA
The Central Bank of Iraq confirmed on Sunday that printing currency is legally prohibited and does not reflect the nature of current operations. It also clarified that there is an essential and important difference between discounting treasury bills and printing currency, both technically and economically.
In a statement received by the Iraqi News Agency (INA), the bank said: "In light of what is being circulated regarding the issue of printing currency and financing public expenditures, the Central Bank of Iraq would like to clarify the following: There is a fundamental and important difference between 'discounting treasury bills' and 'printing currency', both technically and economically. Discounting bills provides temporary financial liquidity against an existing government debt instrument, which is repaid upon maturity. This is an internationally recognized financial mechanism practiced by major central banks, with strict adherence to maturity dates."
It added: “Printing currency, however, is the issuance of new money without backing, which is injects directly into the economy. This leads to direct inflation and erosion of the currency's value. Furthermore, it is not reclaimed and represents a permanent monetary burden. This is strictly prohibited under the Central Bank of Iraq Law No. (56) of 2004. Therefore, the simplistic description of the current operations as ‘printing currency’ does not reflect their true technical and financial nature.”
The bank emphasized that “its primary role is to manage monetary policy, maintain monetary and price stability, and ensure the integrity of the financial system, not to be a permanent channel for financing public expenditures.” It clarified that “the use of certain financial and monetary tools in exceptional circumstances is carried out in a controlled manner and as required by the needs of the national economy, with utmost care to prevent financial pressures from evolving into permanent monetary expansion or inflationary pressures that affect citizens' purchasing power.”
The Central Bank of Iraq stressed that “monetary management is conducted according to precise and rigorous controls within the framework of the law, and that the effects of any operations it undertakes are continuously evaluated to ensure they do not negatively impact the established monetary policy objectives.”
He explained that "current circumstances highlight the importance of adopting long-term fiscal policies aimed at building sufficient financial buffers and safety margins to withstand economic shocks and unsteady oil cycles. This can be achieved through diversifying the economy and revenue sources, and managing public debt with high efficiency to minimize the impact of future crises and maintain overall economic stability."
