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.