Governor of the Central Bank of Iraq Foresees a Surge in Digital Banking
On September 14, 2024, the Governor of the Central Bank of Iraq (CBI), Ali Al-Allaq, made a significant prediction during the Electronic Payment Conference on Financial Stability in Baghdad. Al-Allaq anticipated a substantial increase in the number of digital banks in Iraq, potentially surpassing the digital banking presence in neighboring countries. This projection comes as Iraq moves toward embracing the digital transformation that is reshaping the banking sector across the Arab world.
Recognizing the Global Trend of Digital Banking
Ali Al-Allaq highlighted the global trend of digital banking, noting that digital banks are rapidly expanding worldwide, with annual financial transactions amounting to approximately 7 trillion by 2027. Al-Allaq emphasized the importance of aligning with technological advancements and their application in various operational directions.
Iraq's Position in the Digital Banking Landscape
Al-Allaq stated that Iraq is expected to be one of the leading countries in digital banking, with a greater number of digital banks compared to its neighbors. This prediction is based on the country's strategic efforts to stimulate and focus on the digital banking sector.
Regulatory Frameworks and Digital Banking in Iraq
Before launching the licensing round for digital banks, the CBI conducted extensive studies and reviewed experiences from other countries. The bank has established the necessary rules and regulations for licensing this type of bank. This approach is in line with the Arab Monetary Fund's emphasis on the importance of digital transformation in reshaping the banking sector in Arab countries. The fund advocates for regulatory frameworks that balance stimulating digital transformation with managing and mitigating risks.
Digital Banking Regulations in Iraq
The CBI has launched a regulation for licensing digital banks in Iraq on March 28, 2024. Digital banks operating in Iraq must understand and adhere to the regulatory requirements set by the CBI, including capital requirements, shareholder composition, and other licensing conditions. Digital banks must also implement robust governance and risk management frameworks, comply with anti-money laundering and counter-terrorism financing regulations, and enhance cybersecurity measures.
Conclusion
The Governor of the Central Bank of Iraq's prediction of a rise in digital banks in Iraq, surpassing those in neighboring countries, is a testament to the country's strategic vision for the future of banking. This projection is supported by the CBI's proactive approach to creating a conducive regulatory environment for digital banking. As Iraq moves forward in its digital banking journey, it is poised to become a leader in the region, aligning with global trends and embracing the digital transformation that is reshaping the banking sector.
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