The Central Bank of Iraq (CBI) is moving to make letters of credit (L/Cs) more available to commercial banks and improve access to foreign exchange.

The moves fit with the bank's reported plans to draft new payment terms under which Iraq's international traders will be required to do business on bank guarantee or letter of credit (L/C) terms (DC World News, 24 August 2012).

Currency concerns

The CBI said the first banks to benefit from improved access to foreign currency that should enable them to write more L/C business would include Bank of Baghdad and Mansour Bank.

Making its announcement in December, the CBI said all banks licensed in Iraq would eventually benefit from the same facilities.

CBI refocus

The moves by the CBI respond to its concerns over suspect transactions and foreign currency smuggling.

The CBI has also said that it will reduce its role in the import financing market and will now focus more on monetary policy, foreign exchange management and the control of inflation.

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