In any country, the monetary policy is one of the key pillars in supporting the national economy and development ,So the adopted plans should be reconsidered for the development of the potential of the banking sector and enhance opportunities for its contribution to the mobilization of savings and attract deposits .
Iraq and in the midst of unstable political and economic situation , it is required to perform a comprehensive review of the work and mechanism of the banking sector, which suffers from gaps that confound its work over the past years, especially with the busyness of policymakers with security and political conditions that did not know the serenity for more than 13 years, where the country has been turned into chaos state after the entry of the US occupation forces to Iraq in 2003.
This flaw is not in Baghdad, but also in the Kurdistan region of Iraq, which was not in isolation from events in the whole of Iraq, here Banking experts point to flaws in the architecture of Iraqi banking system , in terms of that there is no state that contain two central banks on its territory, it is not only this, but that the Central Bank of the region is without the law so far, and this is due to the dominance of the Ministry of Finance in the region on it, as it is doing all financial transactions and activities and the distribution of salaries, which includes the distribution of salaries of all security institutions .
The director of Federal Central Bank confirmed that the two branches of the bank in each of the city of Erbil and Sulaymaniyah with their present situation does not represent a part or a branch of the Central Bank of Iraq, and this confuses the work and does not help the region to provide the proper framework for the knowledge for the banking work and financial institutions in the Kurdistan Region. However, the meetings between the two sides have contributed to the agreement that there is a real central bank in the Kurdistan Region, and to be part of the Central Bank of Iraq, and has all the requirements and specifications, The Bank is currently carrying out the process of detailed procedures relating to this trend. As shown in the attached book.
And there is an overlap in the terms of functions and procedures but until now the decision to establish branches of the Rafidain and Rasheed bank in the region has not been taken, due to the reason that the region required to link the Central Bank of region with the Central Bank and its associations with the authorities of the region .Add to this that all branches of banks of the region were owned to the two banks before 1992, but it is linked to the Ministry of Finance in the region , thus the two banks did not open branches in the region , so far, where the Ministry of Finance in the region attributed the cause to administrative reasons and legal procedures.
In talking about the corruption , we recall that recently the Director of the Central Bank of the region and his deputy have been arrested by court order from the body of integrity of Kurdistan region , against the backdrop of disbursement of funds of some of the instruments illegally in exchange for kickbacks.
Observers have expressed their optimism on the decision of Prime Minister Haider al-Abadi in June 2016, the dismissal of eight directors of the commercial banks, Rafidain and Rasheed, and real estate and , industrial and agricultural and others, saying during his meeting with a program” talk of al-Rafidain” , it is a step on the road to reform.
But the policy of the Central Bank still faces criticism about the auction of currency sale and dealing with banks of private sector , and the bank’s board is trying the pursuit toward setting policies and strategic plans to develop the reality of the banking sector as the Bank launched in early 2016, its strategy for the next five years, which included the important goals.
CBI seeks to heal the rift that led to the decline in the banking sector by doing the rounds of inspection and inspecting the transactions of civil banks , on purpose to stop the torrent of corruption that has exhausted the Iraqi economy and the banking sector in particular.
The financial officer at the US Embassy in Iraq, John Sullivan has praised the efforts of Iraq in the reform of the central bank, which confirmed that the bank has “completed within a year more than what has been accomplished in the past 13 years “.
In front of the CBI great responsibilities to reform the sector, which has suffered from many crises, marginalization and exploitation under the previous governments , to be the real house of Iraq’s money and a source of stability of its economy, and this will be by pursuing international standards, and away from interference of ministries and dictating policies and terms on them that have nothing to do with the monetary policy and in addition to the lack of central bank’ ability and its advisers to defend the bank according to its law, and the steps taken by the Bank during the past period may be the introduction of real reforms.
Rawabet Center for Research and Strategic Studies