A “potential” financial crisis… Iraqi banks face new threats at the end of 2024
Shafaq News / The head of the Iraqi Private Banks Association, Wadih Al-Handal, saw on Monday that depriving half of Iraqi banks of dealing in the main international currency (the dollar) had a significant and clear impact on banking services inside Iraq, while he indicated that the central bank decided to cancel work on the platform. The dollar at the end of this year, and this will have a greater impact on the work of these banks. He called for accelerating their connection with international banks.
Al-Handal said, during his speech at the Challenges Facing Arab Banks conference, which was attended by a Shafaq News Agency correspondent, that “Iraq’s broader openness to the outside world supports the development of the Iraqi economic situation, attracts local and international investments, and consolidates the role of the banking sector in development.”
He added, “The vision and work of the Association of Banks is to build a strong Iraqi banking sector capable of facing challenges and contributing more to financing projects of various kinds, supporting the Iraqi economy, developing local and international partnerships, and promoting the concepts of financial inclusion in society.”
He pointed out that “depriving half of Iraqi banks from dealing in the main international currency (the dollar) has had a significant and clear impact on banking services inside Iraq, despite the efforts of governmental and private institutions to comply with local and international anti-money laundering and terrorist financing laws throughout the previous period, according to Al-Handal.”
Al-Handal praised “the efforts of the Iraqi government and the Central Bank of Iraq in resolving these problems with the American side, especially what resulted from the Prime Minister’s visit to Washington and the meeting with a number of American figures and the outcomes that determined the appointment of a review committee and the development of a road map for solutions.”
He pointed out that “the Iraqi Private Banks Association is fully prepared to cooperate and support the plans of the government and the Central Bank of Iraq and contribute to improving the banking environment and developing the banking infrastructure in accordance with best international practices.”
He noted that “the Central Bank decided to cancel the dollar platform at the end of this year, and this will have a greater impact on the banks that are still operating until now by relying on limited foreign correspondent banks.”
Al-Handal called on the Iraqi government and the Central Bank to “work to strengthen the private banking sector by supporting private banks in general and disadvantaged banks in particular to ensure the continuation of their work and open the horizons of banking work more broadly, whether inside Iraq or to help build strong relationships with international financial institutions.”
For his part, the Governor of the Central Bank of Iraq, Ali Al-Alaq, indicated during his speech at the conference that “central banks are facing increasing challenges after decades of traditional functions and missions, especially in light of global economic changes such as rising inflation and levels of public and private debt.”
Al-Alaq explained, “Central banks face new challenges in the interaction between financial and monetary stability, especially in light of the dominance of public finances and the decision of central banks to facilitate government debts, which requires confronting the challenges of compliance with international laws, legislation, and requirements.”
He pointed out that “Iraqi central banks have witnessed qualitative developments over the past ten years, including following up on the principles of compliance, governance, risk management, prudential oversight, and risk-based oversight, in addition to enhancing digital services and financial inclusion.”
The Governor of the Central Bank of Iraq added: “But, despite these developments, there are still major challenges related to compliance with international laws and standards, which affects the opening of local financial institutions at the international level.”
Shafaq.com