The strategy of the Central Bank of Iraq (2016-2020) is a systematic application of banking reform

Adviser and banking expert, Samir Al-Nassery
Articles
Samir Al-Nassery *

The Central Bank of Iraq launched its strategy for the years 2016-2020 in conjunction with Iraq facing an economic and financial crisis because of the global oil price drop by more than 70% and a security crisis by occupying terrorism up to 40% of the country’s lands. The strategy drew a clear road map for the goals and policies for the next five years and the circumstance was Iraq At the time, an economic situation is cruel, complicated, and full of risks, confusion, confusion, and chaos at the level of internal and external economic and financial relations, which is important to us as specialists in economic and banking affairs. What are the new mechanisms and policies adopted by the Central Bank and The government and private banks and related parties regarding banking reform, according to the desired fundamental change approach to the national economy contained in the strategy, which constitutes the banking sector, the first and primary link in it.
The central bank strategy has defined and charted the path for banking reform according to the following main objectives:


* Support and achieve financial stability

* Activating the role of the banking sector and financial institutions.
* Developing the organizational structure and organizational structure.
* Development of human capital.
* Activating and integrating internal and external relations.
 
Since these strategic goals have been defined as a period of five-year applications for the achievement of 23 sub-goals that I derive from are based on achieving financial stability, establishing the financial system, generalizing financial inclusion, and arriving at an institutional and structural reform of the banking sector in Iraq.

Through an analysis of the mechanisms and points of action to achieve the above goals, we note that the strategy set clear priorities for achieving reform and certainly that these priorities were diagnosed in light of the challenges facing the banking sector due to the stifling economic and financial crisis that Iraq suffers from for subjective and objective reasons which can be diagnosed as follows: -

* Working to achieve the objectives of monetary policy, the most important of which are the stability of the exchange rate, the maintenance of the purchasing power of the Iraqi dinar, the inflation rate, and the building of a foreign monetary reserve.


* Work to restore the confidence of citizens and customers in the Iraqi banking sector.


* Working to increase the ratio of savings to the cash mass in circulation in banks to the percentage of hoarding outside the banks, where the savings rate reached 23% and the percentage of compactness 77%. Increasing the percentage of financial inclusion and the delivery of banking services to the widest spread of geographical area and at the level of governorates, districts and districts, and increasing banking density in this direction.


* The necessity of completing the structural and technical pillars of proactive monitoring.


* Establishing and activating the Deposit Guarantee Company and issuing a law to combat money laundering and the Islamic Banking Law and reviewing the legislative environment laws that regulate banking work.


* Review and appraise the results of the banks ’business and reclassify them by accredited international companies. And identify weak banks that need the intervention of the Central Bank of Iraq to rehabilitate, re-activate and protect them from bankruptcy.


* Claiming government support and assistance and compensation for the banks that were damaged in the provinces occupied by ISIS.


* The need to strengthen and activate the initiative of the Central Bank in financing small and medium projects in a manner that contributes to stimulating the economic cycle and diversifying the resources of the general budget.


* The necessity of reconsidering the organizational, technical, and administrative structure of the Central Bank of Iraq and government and private banks while confirming the principles of governance and determining the intervention of owners in the executive departments of banks.

Therefore, and for the purpose of applying the banking reform approach according to what was stated in the strategy according to an insight into the priorities and challenges that the Iraqi banking sector suffers from, the Central Bank made exceptional efforts during the previous years of the strategy and achieved many goals from the primary and subsidiary goals and tries to complete achieving all the goals in the year 2020, the last year of The strategy. Therefore, the executive and procedural steps and achievements made by the Central Bank during the period of implementing the strategy’s goals can be identified as follows: -

First: To study and analyze the reality experienced by governmental and private banks by reviewing, evaluating and classifying these banks based on their financial statements and the results of their business for the years (2016-2016) and adopting clear evaluation indicators based on the applicable banking law and international standards. And determining performance efficiency standards for banks in all areas of administrative, banking and credit banking work and identifying banks that continue to operate in the banking market and banks that are proposed to merge with other banks in order to increase the efficiency of their work and change their current departments with specialized and efficient departments and develop the work of good and discreet banks and help them to continue to work within the sector The Iraqi banker is within its proper and correct contexts, given that the banking sector is the basis for building the national economy.

Second: The establishment of the Central Bank of Iraq with full control and supervision of the movement of banking business in Iraq by focusing on pre-emptive electronic and field office oversight in a programmed and planned manner, identifying violations, omissions and abuses of the banking executive departments and taking corrective measures. And download the legal responsibility of the Board of Directors and the Executive Management in a specific and clear manner.



Third: Implementing the decision of the Board of Directors of the Central Bank of Iraq on the controls for nominating members of the Board of Directors and leading employees of banks and focusing on professional competence, job integrity, personal and commercial reputation, and specialist expertise.
The application of the principles of governance and separation between owners and executive departments and not allowing them to interfere at all with the executive work. Owners can adopt specialized advisors in preparing banking plans and determine the efficiency of performance and follow up the implementation of what the Council plans in a manner commensurate with the concern for the funds of shareholders and customers.

Fourth: - Maintaining the Iraqi dinar exchange rate against foreign currencies. And building foreign exchange reserves exceeding $ 80 billion despite the challenges and crises that the country has gone through.

Fifth: The establishment of a deposit guarantee company and legal procedures are ongoing for the purpose of commencing them soon.

Sixth: Activating and developing the initiative to encourage and finance small and medium-sized projects with economic and development feasibility and work continuously jointly with banks to increase the allocation for financing to the ceiling of one billion dinars for each development project and facilitate procedures, conditions and guarantees and achieve the economic and social goal.

Seventh: Commitment and action in accordance with the controls issued by the Central Bank of Iraq with regard to combating money laundering and terrorist financing derived from the recommendations of the Financial Action Group (FATF). And settling negative comments installed on Iraq, which contributed to the exit of Iraq from the gray area to the regular follow-up area, and building international banking relations with central banks and discreet correspondent banks.

Eighth: Commitment to the regulatory instructions developed by the Central Bank in cooperation with the Metac Center of the International Fund and make them live up to international standards and the requirements of Basel III.

Ninth: The shift in preparing the final and interim data to the International Accounting Standards (IFRS), which guarantees the transparency of data and its handling by all parties responsible for financial reporting.

Tenth: Work to encourage and stimulate financial inclusion processes and try to increase its percentage in Iraq through the adoption of the salary settlement project, which is a step to reduce the use of cash and the direction of growth of the non-cash community.

Eleven: Use all methods and procedures to be adopted to verify sources of funds and follow up on combating money laundering and terrorist financing in accordance with Law No. 39 of 2015.

Twelve: Taking the necessary measures by adopting the standards and rules of compliance and managing risk and adopting a precautionary policy to contribute to sensing risks and then taking the necessary means to deal with any risk.

Thirteen: Adoption of the unified bank number (IBAN), which contributes to improving the level of banking services, clearing services, and settlement of payments locally and internationally.

Fourteen: Commitment and action in accordance with the policies and procedures contained in the Governance Manual, which establishes transparency, disclosure and separation of management from ownership.

Fifteen: Issuing the electronic payment system for funds No. 3 of 2014, establishing the National Payments Council, governance controls, institutional management of information and communication technology, regulations and legal instructions that govern the work of banks and electronic payment services providers.

Sixteen: Establishing advanced and pursuit infrastructure for the latest global technologies, developing the bank's financial and banking systems, payment systems and advanced communication networks according to the latest technologies.
And the ownership of the central bank, banks and electronic payment companies for advanced payment systems as well as retail payment structures, and the National Divider was one of its most important parts.

Seventeen: Granting work licenses to many electronic payment services providers (card issuers, collectors, processing of mobile payment company operations, billing bidders and payment gateways through various channels).

It is clear from the above accomplishments that the central bank and the banking sector have overcome the challenges of the gap between Iraq and other countries because of the occupation and terrorism, and today it is proceeding with a steady step to achieve the digital transformation in the financial and banking sector and achieve financial stability and the transition from the cash community to the cashless community.
Therefore, the central bank strategy has proven that it has established, planned and made advanced steps towards the systematic application of banking reform.






http://economy-news.net/content.php?id=18934