Shafaq News/ A new agreement with Washington will allow ten Iraqi banks to obtain US dollars from the Federal Reserve, Iraq's state news agency quoted a government source on Sunday.

The source said that the deal was sealed after a series of extensive meetings between representatives from the Central Bank of Iraq (CBI) and the US Federal Reserve in Abu Dhabi.

"Ten banks will be able to consolidate their assets with dollars from US banks directly: five from Citi Bank and five others from JPMorgan," he said. "the number Iraqi banks allowed use with the Yuan at the Singaporean Development Bank to boost their asset will be increased to thirteen."

The source told INA that two Iraqi banks will have access to the Indian Rupee trade window at the Development Bank in Singapore. "Other banks will follow in the next weeks."

Iraq plans to ban cash withdrawals and transactions in US dollars as of the January 1, 2024 in the latest push to curb the misuse of its hard currency reserves in financial crimes and the evasion of US sanctions on Iran.

The move aims to stamp out the illicit use of some 50% of the $10 billion that Iraq imports in cash from the New York Federal Reserve each year. It's also part of a broader push to de-dollarize an economy that has seen the greenback preferred over local notes by a population weary of recurring wars and crises following the 2003 US invasion.

Iraq has already set up a platform to regulate wire transfers that make up the bulk of its dollar demand and that used to be a hotbed of fake receipts and fraudulent transactions that siphoned dollars to Iran and Syria, both countries under US sanctions.

Iraq is heavily reliant on Washington's goodwill to ensure oil revenues and finances do not face U.S. censure. At the same time, the current government, which is backed by powerful parties and armed factions close to Iran, has been careful not to alienate Tehran, nor anger the parties and armed groups with deep interests in Iraq's highly informal economy.