Cash Only: Why the Messy Banking Sector Endangers Iraqi Development

Meanwhile on the positive side, the Iraqi stock exchange has been growing faster than any other index in the region, the main stocks being traded involve banking and projections for the stock market’s growth are very optimistic. This is a big vote of confidence in the future of the banking sector.

Additionally there have been talks of banking sector reform, which has included the introduction of electronic banking. While only 20 percent of Iraqis have a bank account, around 80 percent have a mobile phone and phone banking was a hot topic at the “Integrating the Banking and Financial Services Sector in Iraq” conference held by USAID and the Central Bank of Iraq last November.

However modernising Iraq’s banking sector will not be achieved solely by introducing new technology. Modernisation needs to start by opening up the markets and bringing in competition. As long as the public banks remain the dominant players in the market, there is not much chance of improving the current situation. Privatising the major banks would be a quick way of revolutionising the Iraqi banking sector. Having said that, this move seems unlikely given the current government record of maintaining control.

At least some of the problems Iraq has could be healed by a strong economy and more prosperous nation. And the long road toward this begins with better financial structures and a stronger banking sector, complete with all the regulations required.

A free market and the equal right of all consumers to participate in it, has helped to bring communities together. The failure of Iraqi politicians to grasp the urgent need to revamp the banking sector, and to understand the basic economics of growth, has had a significant impact on the pace of development in the country. The failure to carry out needed reforms – and not just those in the banking sector – is one of the major reasons that, as was reported recently, around 23 percent of the population in resource-rich Iraq are living below the poverty line.

(Source: NIQASH)

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4 Responses to Cash Only: Why the Messy Banking Sector Endangers Iraqi Development

  1. Uruki-the-Iraqi 3rd March 2012 at 00:54 #

    “Looking around the world, it is clear that a strong banking sector is essential to a successful economy” … This is an absolutely false statement and a mirage reality … Once the World Bank, the IMF and other big financial corporations in London, New York and Tell Aviv (behind them) enter a country, a total monetary collapse follows … We have seen such disastrous results in Greece, Italy, Spain, Portugal, Ireland, Malaysia and many other countries … Iraq must not be manipulated by these so called world financial institutions… Iraq must follow the Chinese financial model, since CHINA is anticipated and posed to become the next super power in 2015 and beyond … Iraq should also keep its finances CLOSED to these international robbers… Iraq MUST oppose ALL foreign interventions in its economy… Iraq must also create a new Iraqi GOLD dinar and force the rest of the world to trade with it instead of trading in Dollars, Euros and British Pounds!!

  2. Jaydee 3rd March 2012 at 10:54 #

    Iraq’s weak currency is killing their economy. I’m inclined to say the Iraqi politicians really don’t care for their people like they lead the world to believe. A boost in currency value would allow the Iraqi citizens to trade and have more buying power. Everyone knows the stronger your currency the more you empower your people, the more folks spend and stimulate the economy. Its a shame what these Iraqi politicians are doing. The U.S. has done what it was suppose to do…it liberated the country. It’s time for Iraq to stop acting like baby’s(that need breast milk).

  3. Stew 3rd March 2012 at 19:59 #

    That’s interesting Jaydee.
    Why does Japan have one of the top economies in the world with a yen rate of about 100:1?
    How did Italy have one of the top economies in the world for years with a Lira valued at 1500:1 prior to them joining the E.U.?
    There are also many coutries at the bottom of the economic ladder that have great exchnage rates. Why is that?

  4. Uruki-the-Iraqi 4th March 2012 at 06:44 #

    Jaydee, it appears that you do not know much about Iraq’s economy or even its history… The Iraqi Dinar was (at one point in TIME) worth 4 Dollars (that is a rate of 1:4)… Iraq is also somewhat a semi-socialist country (Islamic society dictates that), meaning the Iraqi government is STILL the biggest employer of Iraqis in Iraq… The problem of Iraq was the senseless WARS (three successive wars) which depleted Iraq’s national GOLD reserves (currently 5 tons)… Here are some examples: USA (8133 tons), Germany (3396), China (1054), Iran (907), Russia (883), Japan (765), India (557), Saudi Arabia (322), UK (310), Lebanon (286), Algeria (173), Libya (143), Kuwait (79), Jordan (12) and so on… As you can see Iraq stands at the bottom list of gold reserves and small countries such as (Lebanon, Kuwait and Jordan) hold even more GOLD than Iraq, which by the way is larger (in size, population and economy) than these 3 Arab countries combined!!!… As to your suggestion of liberating Iraq, well we also wanted to liberate your (countries and peoples) from BUSH, TONY BLAIR and most definitely the BILDERBERG GROUP … Yes we are babies feeding on breast milk but the million dollar question is “What is it to you?” And what are your babies feeding on then?? BLOOD!!