Iraq strives enhancing banking system

Iraq strives enhancing banking system
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By Saman Dazzayi

Baghdad - The opinions of a number of Iraqi economists varied about the demands of the Iraqi Central Bank (ICB) to facilitate granting licenses to establish private banks in the country, especially with regard to the reduction of capital.

Ali Kah Gih, the economist and the head of the Iraqi market center told AKnews that the economic situation in Iraq needs to activate the Law of the Central Bank about money laundering and follow-up and lack of emphasis on the granting of licenses for financial companies in the establishment of private banks.

"All establishment controls in the regional countries depend on the basis of available capital which is found in the other banks and not on the basis of capital granted to the ICB and with large amounts."

"The central bank's efforts were important and effective to expand the performance of private banks but it still tough in the imposition of capital and dealing strictly in grating the establishment licenses."

The economic expert and member of the founding committee of the private banks Ibrahim al-Mikdadi told AKnews that "the private banks must be handled within the guidelines of financial monetary ie, on paper of economic policy provided by the founders and not by imposing 250 billion dinars as a basis for bank capital sector."

"The capital is supposed to be paid on three phases to develop the monetary structure of the bank and raise the level of its interaction with other banks."

"The deal of central bank with private banks should be focused on the ability of banking firms to deal with the system of computing and electronic communication between them and the banks of the world."

While the opinion of the economic analyst and the official of the Economic Section in Mada Foundation Abbas al-Ghalibi differed from the opinions of the previous economists and said that "the development of strict controls on private banks will improve their situation where a large part of them is similar to the exchange shops where they lack the most basic mechanisms of banking work."

"The central bank is demanded today to reconsider the law of the establishment of banks and raise the ceiling of capital and work to provide supervising cover on financial and cash transactions."

"Iraq will witness soon wide investment and commercial movement and good banks must be available with capital and profits to improve the banking sector."

The ICB assured on Saturday that it identified 250 billion Iraqi dinars as a minimum for the establishment of private banks in the country.

The ICB announced last month that it will grant a number of licenses to establish private banks, stressing on that the increase in banks will enhance the economic role of the country.

The Ministry of Planning and Development Cooperation said last Thursday that the inflation rate increased during February by 0.3% since last January.

A number of economists have fears from the continuing high rates of inflation in the country in the absence of mechanisms to reduce its increase by government institutions that are concerned in managing the economy in the country.

The ICB announced last October last that the rate of inflation in Iraq decreased by 2.7% if compared with last September and this encouraged the launch of liquidity for banks by 5% from the legal cash reserves in order to expand the lending operations and advance the development process.

The main task of the ICB is to maintain the prices stability and the implementation of monetary policy, including exchange rate policies, managing the reserves of foreign currency, issuance and management of currency as well as regulating the banking sector.
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