Coalition Provisional Authority
March 7, 2004 Contact: Victoria Whitford (email@example.com)
New Law Governing the Central Bank of Iraq
Ambassador L. Paul Bremer, Administrator of the Coalition Provisional
Authority, today announced the issuance of a new law governing the Central Bank
of Iraq. 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. 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
The Central Bank will develop and implement monetary policy, including exchange
rate policy. It will also act as fiscal agent of the Government of Iraq which
entails issuing and redeeming the securities of the Ministry of Finance. Other
responsibilities will be to license and supervise both state-owned and private
commercial banks as well as other lending and money transmission companies; and
operate an interbank payment system and supervise other payment systems.
The Central Bank is required to maintain its independence from the Government.
In particular, the Central Bank may not lend to the government and may establish
and fund its own budget.
The new law provides for a Financial Services Tribunal which will be authorized
to review certain actions of the Central Bank. For example, the Tribunal may
review the Central Bank’s rejection of an application for a banking permit or
the imposition of a fine by the Central Bank. The Tribunal is expected to
develop special expertise in banking and financial matters. A dispute between
banks or financial institutions may be referred to the Tribunal by written
The law has been reviewed by the Governing Council of Iraq, acting on the
recommendation of its Economic and Finance Committee. The law has also been
extensively reviewed by the International Monetary Fund and other international
The law is consistent with United Nations Security Council Resolution 1483,
calling upon the CPA to promote economic reconstruction and the conditions for
sustainable development. The law is also consistent with the Report of the
Secretary General to the Security Council concerning the need to transition from
a centrally-planned economy to a market economy.
Also Available is a Fact Sheet on the New
Central Bank Law.