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Shafaq News- Baghdad<\/p>\n
Iraq\u2019s banking sector faces a \u201ccritical crossroads\u201d
\nafter years of weak management, oversight failures and declining public
\nconfidence have limited its ability to attract savings and finance investment
\nand development, the prime minister\u2019s economic adviser told Shafaq News on
\nSaturday.<\/p>\n
Mudher Mohammed Saleh said building an efficient
\nbanking system could no longer be delayed, particularly in an economy heavily
\ndependent on oil for foreign currency. \u201cRestoring confidence requires stronger
\ngovernance, supervision and compliance, strict anti-money laundering and
\ncounter-terrorist financing standards, restructuring troubled banks, addressing
\nweaknesses in their financial positions and raising capital in line with risk
\nlevels and modern banking requirements.\u201d<\/p>\n
Technology is another key part of the overhaul, Saleh However, technology and oversight alone would not He called for banks to shift from traditional services \u201cA bank that does not finance productive economic Read more: Iraq turns to borrowing to cover salaries amid oil-revenue collapse<\/a><\/p>\n From Cash to Credit<\/p>\n International economics professor Nawar Al-Saadi told Rebuilding confidence requires sound governance, Depositors should find banks \u201csafer and easier to use\u201d Read more: Iraq\u2019s private banks: Capital Growth and the structural credit gap<\/a><\/p>\n Protecting Deposits<\/p>\n Economic expert Ahmed Al-Janabi said reform required a He noted that the reform program involving global Al-Janabi estimated that currency<\/a> issued by the CBI Economic expert Ahmed Abdul Rabbo said the reforms
\nsaid, calling for improved digital<\/a> systems, cybersecurity and risk management,
\nalong with secure and reliable electronic payment services. Such measures would
\nreduce reliance on cash, expand financial inclusion and bring more people into
\nthe formal banking system.<\/p>\n
\nrestore confidence. Banks also need greater transparency, stronger depositor
\nprotections, clear deposit safeguards, faster complaint handling and the
\nability to protect customers\u2019 money, according to the advisor. <\/p>\n
\nand liquidity management toward financing the real economy, particularly small
\nand medium-sized enterprises and productive agricultural, industrial and
\nservice sectors.<\/p>\n
\nactivity remains a financial intermediary with limited impact,\u201d he said, adding
\nthat institutions capable of mobilizing savings, managing risks and financing
\nproduction and investment can become partners in development.<\/p>\n
\nShafaq News that banking reform had become essential for moving Iraq from a
\ncash-based economy toward one driven by financing. He said the Central Bank of
\nIraq\u2019s (CBI) program offers banks several paths, including remaining in
\nbusiness, merging or leaving the market, alongside tougher governance,
\ncompliance and risk-management requirements.<\/p>\n
\nsolvency and transparency rather than campaigns to attract deposits, Al-Saadi
\nsaid. He called for resolving the status of banks unable to continue operating,
\nstrengthening the capital of viable institutions, improving disclosure and
\nindependent auditing, and holding boards and executives accountable for
\nviolations.<\/p>\n
\nthan keeping cash, he added. This would also require greater lending to small
\nand medium-sized businesses and productive sectors, as well as effective
\ncredit-scoring systems instead of excessive reliance on traditional collateral.<\/p>\n
\ncomprehensive package beginning with restoring confidence and protecting
\ndepositors\u2019 money, noting that many Iraqis remain reluctant to place their
\nsavings in banks.<\/p>\n
\nconsultancy Oliver Wyman was developed against the backdrop of restrictions on
\nseveral Iraqi banks. Seven institutions subsequently entered an initial phase
\nallowing them to resume transactions and transfers in foreign currencies other
\nthan the dollar, while further reforms remain underway.<\/p>\n
\ntotals around 103 trillion dinars, while about 20 trillion dinars remain
\noutside the banking system, much of it \u201choarded in homes.\u201d<\/p>\n
\nundertaken with Oliver Wyman were important for rebuilding the banking sector,
\nimproving its efficiency and strengthening its links to the global financial
\nsystem, calling for faster implementation.<\/p>\n