The US administration in Iraq said on Sunday it had passed a new law governing the Central Bank of Iraq which establishes price stability as the main objective of the independent institution.
The law had already been approved by the financial committee of Iraq's Governing Council, but officially came into effect on Sunday after being issued by Paul Bremer, the US administrator in Iraq, a US spokesman said.
"The new law provides for an independent central bank whose objectives are to achieve and maintain domestic price stability and to foster and maintain a market-based financial system," a statement from the US authorities said.
"The Central Bank also has secondary objectives of promoting sustainable growth, employment, and prosperity in Iraq. The Central Bank will function as a modern central bank in line with current international best practices."
Last July, US authorities in Iraq issued an order to ensure the Central Bank's independence, suspending its authority to lend to ministers and allowing it to determine and implement monetary policy without approval from the Finance Ministry.
The new law states the Central Bank will develop and implement monetary policy, including exchange rate policy. It will act as fiscal agent of the Iraqi government, which entails issuing and redeeming the securities of the Finance Ministry.
Other responsibilities will be to license and supervise both state-owned and private commercial banks as well as other lending and money transmission companies, operate an interbank payment system and supervise other payment systems.
The law also provides for a Financial Services Tribunal authorised to review certain actions of the Central Bank, such as the rejection of an application for a banking permit or the imposition of a fine.
Comments
Comments are closed.