Iraq Deposits Five Billion Dollars with US Federal Reserve

[Monkie]

http://www.hispanicbusiness.com/news/newsbyid.asp?id=20833

"BAGHDAD, Feb 8 (AFP) - The Iraqi central bank has built up five billion dollars in reserves in recent months which have been deposited with the US Federal Reserve, a top US treasury official said Tuesday.

The sum will earn the Iraqi government about 100 million dollars of much needed interest each year, John Taylor, US treasury under secretary for international affairs, told a press conference after talks with Iraqi officials"

"Taylor said the five billion dollars had built up from the currency transactions since the introduction of the new Iraqi dinar. "

maybe someone with more understanding of international finance can explain this to me?
why would iraq deposit money with the federal reserve??
more to the point why would a sovereign country chose to hold its reserves in dollars considering its near collapse recently?
in case anyone forgot iraq switched to the euro in 2000 (i personally think this was AS important a motivation for invasion as iraq's oil reserves)

http://www.globalpolicy.org/nations/sovereign/dollar/2000/1101baghdad.htm

"Baghdad Moves to Euro
By Charles Recknagel
Radio Free Europe / Radio Liberty
November 1, 2000

Iraq is going ahead with its plans to stop using the U.S. dollar in its oil business in spite of warnings the move makes no financial sense. Baghdad this week insisted on and received UN approval to sell oil through the oil-for-food program for euros only after 6 November"

[DS1]

1. So they get 4 back?

:eyes:

[kysrsoze]

2. Uhhh....maybe because it's not a sovereign country?

That's just my guess. Yeah, they were PLANNING to go to the Euro before all this happened.

[woodsprite]

5. Wouldn't they make out better

if they invested in a privatized account in *'s new Social Security Scheme?

[davekriss]

20. They actually DID go to the Euro

I gotta' run to a meeting or I'd supply a link (google is our friend). In fact, Hussein's regime profitted handsomely from the early run-up in the Euro. I'm convinced that we invaded Iraq to punish them from deviating from the OPEC norm of exchanging oil for U.S. dollars.

[cthrumatrix]

3. if they are now suing the $ as their oil currency or reserves for other

commodities only conducted in dollars.

Notice the Euro is OUT os the picture...funny how that happened.

[rogerashton]

4. Iraq's central bank,

like any national central bank, needs reserves of "hard currencies" to manage their national currency. It is very common for central banks of various countries to hold US dollars for that purpose. I don't think they usually deposit them in the Federal Reserve, though -- ordinary commercial banks here in the states deposit substantial parts of their reserves in the Fed, and that is the main purpose of deposits in the Fed.

[simcha_6]

6. We probably leaned on them a bit

in order to convince them to buy into the treasury. That said, we don't exactly have a bad record in the treasury. We don't default on debts, we have a huge GDP, and while we're revelling in fiscal insanity these days, that's bound to change in four years, or even sooner if Bush continues with these service cuts and fails his Social security plan.

[htuttle]

12. It doesn't help that the President's people are going around right now

...calling our Treasury instruments "meaningless IOU's".

With the dollar in perpetual decline, keeping it here was a guaranteed way to lose more on dollar losses than they'll ever make on interest.

[htuttle]

7. They only get 2% annual interest on a 5 billion dollar deposit?

Um, is it a "passbook savings account" or what?

Seems like they should be able to do quite a bit better on 5 billion in cash.

Unless my math is wrong (5,000,000,000 x .02 = 100,000,000)?

"The sum will earn the Iraqi government about 100 million dollars of much needed interest each year, John Taylor, US treasury under secretary for international affairs, told a press conference after talks with Iraqi officials"

[bif]

9. Do they at least get free checking with that account?

[SpiralHawk]

15. No, they negotiated hard for the "free" toaster oven

The US megabuck gnomes convinced the Iraquis that there could be a bright future in the Middle East for toast, realistically speaking.

[daleo]

14. And just think of the service charges.

"Um, sorry Mr. Iraq, your account is out of money. It seems like there was a $5 billion "liberation fee" charged against it."

[Botany]

8. Something does not pass the smell test!

:puke:

I know when I have money I always put it into bank accounts that are not my
bank of record.

[matcom]

10. and when they turn 65.............

they will be allowed to keep $100,000.00 of it in annual annuity payments until they die.

[Massachusetts]

11. The clown show continues

Bring OUR Troops Home.

Where is the OUTRAGE?:wtf:

[HysteryDiagnosis]

13. Now the real reason for shrub's killing machine comes into the

light. How refreshing.

[Freedom_from_Chains]

16. Maybe because they were told to put it in there.

I don't see them as being in a real good position to argue the point.

[tabasco]

17. Your tax dollars at work !

I wonder where the other 4 billion went.

[GHOSTDANCER]

18. Bullshit. This sounds like a US money laundry/hiding scheme of some sort?

This is how the US makes other nations dependent on them. You buy into the belief of the dollar and once it wiggles its way through the very fabric of society, it can't be stooped. It's like a addictive virus.

[w4rma]

19. So basically 5 Billion from the "War on Terrorism" has been redeposited

, temporarily, back into the U.S. treasury.

I suspect money laundering.

[rodeodance]

22. maybe it is part of the 8 billion that is 'lost"??

[Kimber Scott]

23. That's exactly what I was thinking! nt

[CHIMO]

21. Beyond The Obvious

It may just be a continuation of the deal with OPEC as described in Confessions of An Economic Hit Man.