DINAR REVALUATION UPDATE: Impact of the Basel D-SIB Framework on Iraq's Banking System in 2024, 24 AUGUST

 Impact of the Basel D-SIB Framework on Iraq's Banking System in 2024

The Basel D-SIB (Domestic Systemically Important Banks) framework, published by the Basel Committee on Banking Supervision in October 2012, has been instrumental in strengthening the resilience of domestic banking systems worldwide. 

 As of 2024, Iraq has taken significant steps to align its banking sector with this framework, enhancing the loss absorbency capacity of its banks beyond the requirements set by Basel III. 

Enhancing Loss Absorbency and Risk Management

Iraq's banking system has undergone reclassification to better absorb shocks caused by economic failures. 

 This reclassification involves the adoption of stringent measures to ensure banks have sufficient capital and liquidity to support all risks in their business operations. 

Implementation of Basel Framework Pillar 

In June 2024, a mission was organized to strengthen the Central Bank of Iraq (CBI) supervisors' capacity in Basel Framework Pillar 2. 

 This pillar focuses on the supervisory review process (SRP) and internal capital adequacy assessment process (ICAAP). 

 The mission aimed to enhance understanding and implementation strategies for these components. 

Treasury Single Account (TSA) Implementation

Iraq has also progressed in implementing the Treasury Single Account (TSA). 

 The third workshop on advancing TSA implementation was held in July 2024, with core members from the TSA Implementation Committee actively engaged in discussions and planning. 

 Actions agreed upon include advancing the TSA design, developing a database for TSA bank accounts, and designing portals for data collection. 

Impact on Currency and Global Banking Measures

Iraq's measures to reclassify its banking system indicate its preparedness to align with global banking stress measures. 

 While the immediate impact on currency reclassification is not explicitly disclosed, these steps signal a move towards greater financial stability and international compliance. 

Conclusion

Iraq's adoption of the Basel D-SIB framework in 2024 reflects its commitment to enhancing the resilience of its banking system and aligning with global financial standards. 

Through the implementation of Basel Framework Pillar 2 and the TSA, Iraq is positioning its financial sector to withstand economic shocks and participate effectively in the global economy.