CBI's New Banking Guidelines: What You Need to Know!

DINAR REVALUATION REPORT: Economic Analysis: Impact of Declining Private Sector Deposits on Iraq's Banking System, 19 SEPT

Economic Analysis: Impact of Declining Private Sector Deposits on Iraq's Banking System

An unofficial Iraqi financial report has revealed a significant decline in the acquisition of private sector deposits by 12 local banks compared to a significant increase in the share of banks that have banking relationships with American financial institutions. 2

Shift in Private Sector Deposits

A report by Iraq Future for Economic Studies and Consultations disclosed a shift in the distribution of private sector deposits among Iraqi banks during the first half of 2024. Three Iraqi banks that maintain correspondent relationships with US financial institutions controlled nearly half of all private sector deposits in the first six months of 2024, holding 47% of private deposits, an increase from their 34% share in 2019. 2

Meanwhile, the 12 banks capable of international financial transactions, but without US correspondent relationships, saw their share of private sector deposits drop to 36% by mid-2024, down from 42% in 2019.  2

Implications on the Iraqi Banking System

This shift in private sector deposits has profound implications for the Iraqi banking system. The Central Bank of Iraq has acknowledged that reliance on correspondent banks for external transfers plays a crucial role in this new distribution of deposit shares. 4 The rise of US-linked banks is expected to continue, with these banks accounting for more than 50% of private sector deposits by the end of 2024. 4

Impact on the Iraqi Economy

The decline in deposits in local banks that lack US correspondents is the result of several factors, including corruption and liquidity risks. Banking expert Abdulrahman Al-Shaikhli explained that corruption in the banking sector and the lack of confidence in local banks have contributed to this trend.  4

Conclusion

The significant decline in the acquisition of private sector deposits by local banks in Iraq and the increasing dominance of US-linked banks pose challenges to the country's banking system. This trend could potentially lead to an imbalance in the banking sector, impacting the financial stability and growth prospects of the Iraqi economy. Understanding and addressing the underlying issues, such as corruption and lack of confidence in local banks, is crucial for the sustainable development of Iraq's financial sector. 

Economic Analysis: The Impact of Declining Private Sector Deposits on the Iraqi Banking System, 19 SEPT

 An informal Iraqi monetary report uncovered a huge decrease in the securing of private area stores by 12 neighborhood banks, contrasted with a critical expansion in the portion of banks that have banking associations with American monetary organizations.

 This shift is viewed as a critical defining moment in the Iraqi monetary scene, and it reshapes the financial area, yet additionally fundamentally affects the Iraqi economy overall and on the day to day routines of residents.

The ascent of US-connected banks

As per a report gave by the Iraq Future Starting point for Financial Examinations and Meetings, three Iraqi keeps money with journalist associations with US banks represented around 47% of complete confidential area stores in the Iraqi financial framework in the principal half of 2024, a huge increment from the 34% they represented in 2019. In contrast, the proportion of deposits held by local banks without international financial relationships decreased, going from 42% in 2019 to 36% by the middle of 2024.

This pattern is supposed to deteriorate, with US-connected banks expected to represent over half of private area stores toward the finish of 2024. The Central Bank of Iraq has acknowledged that this new distribution of deposit shares is significantly influenced by the reliance on correspondent banks for external transfers. Yet, this shift has expansive ramifications for the Iraqi monetary framework and its residents.

Influence on the Iraqi economy

Loss of trust in nearby banks The decrease in stores in neighborhood banks that need US reporters is the aftereffect of a few variables, including debasement and liquidity chances. Banking master Abdulrahman Al-Shaikhli made sense of that debasement in these establishments sabotages trust among contributors and banks. This can restrict banks’ capacity to draw in stores and keep up with liquidity, hampering their job in supporting the economy.

This loss of confidence may exacerbate Iraq’s liquidity crisis, limiting capital flows to local businesses and stifling economic expansion. At the point when confidential banks neglect to move certainty, people and organizations might abstain from saving or go to elective financial choices, restricting the capital accessible for loaning and venture.

Capital focus The rising strength of U.S.- connected banks is prompting a centralization of capital in a couple of foundations, possibly prompting monopolistic patterns in the Iraqi monetary area. Due to their international connections, these banks may provide greater stability, but they may also reduce market competition, resulting in inefficiencies. Small and medium-sized businesses in Iraq that rely on domestic financial services may face higher borrowing costs as a result of this concentration.

In an economy like Iraq, where expansion away from oil is fundamental, the financial area assumes a critical part in supporting new areas. Powerless nearby banks could hamper supporting of crucial areas like farming, industry and non-oil trades, which are basic for long haul reasonable development.

Confining admittance to monetary administrations The downfall of neighborhood banks implies that numerous Iraqi residents, especially in provincial or underbanked regions, may confront decreased admittance to essential financial administrations. Banks partnered with the US might zero in on enormous clients, leaving private ventures and individual contributors with less choices. This could increment monetary avoidance, making it harder for standard Iraqis to acquire credits, set aside cash, or go through with regular financial exchanges.

Besides, reputational chances related with debasement in a few neighborhood banks might make residents hesitant to manage these establishments, restricting their capacity to partake in the conventional economy. This might push more individuals to utilize casual monetary channels, expanding the gamble of extortion or misfortune, and debilitating the soundness of the economy overall.

The enduring of dealers and confidential area laborers Merchants likewise communicated their interests about the challenges they face in managing monetary exchanges through Iraqi banks. Ahmed Al-Fahd, an individual from the Organization of Offices of Business in Baghdad, brought up that the systems connected with monetary exchanges through the electronic stage are frequently confounded and tedious, in some cases arriving at 10 days. This makes deferrals and vulnerability for merchants who depend on quick exchanges to finish global exchange tasks, particularly as to imports.

This low effectiveness in the financial framework leads numerous dealers to turn to cash exchanges or global financial choices, which lessens trust in nearby financial establishments and entangles endeavors to screen monetary streams and direct them as per worldwide norms.

The CBI’s changes, which expect to extend electronic monetary exchanges and give new advantages to contributors, are fundamental stages to modernize the financial area. However, stronger efforts to combat corruption, increase transparency, and restore trust in local institutions must accompany these measures. Without resolving these essential issues, the difference between U.S.- connected banks and nearby banks could develop, prompting a financial framework separated as certain foundations rule the market while others battle.

This developing circumstance presents difficulties to the security of the Iraqi economy in general. A well-working and stable financial area is vital for encourage speculation, support organizations, and construct public trust in the monetary framework. As the public authority tries to draw in unfamiliar venture and empower private area development, the steadiness and proficiency of the financial framework will be of vital significance.

All in all, the latest thing of store focus in banks partnered with U.S. monetary foundations reflects further issues inside the Iraqi financial framework, including debasement, failure, and the powerlessness of nearby banks to rouse certainty among investors. While these banks might give more prominent dependability, their rising strength gambles minimizing neighborhood establishments and confining admittance to essential monetary administrations for some Iraqis. The public authority and the National Bank of Iraq ought to focus on changes that point not exclusively to modernize the monetary framework yet in addition to reestablish trust in neighborhood banks. Addressing these difficulties is basic to guaranteeing supportable monetary development, steadiness, and success for Iraqi residents.

Office for North America and the Economic Studies Unit

SUMMARY OF LATEST POSTS OF. NADER FROM MID EAST, 19 SEPT

 Summary

The Governor of the Central Bank of Iraq predicts a rise in digital banks, surpassing those in neighboring countries, during a conference in Baghdad.

Highlights

• 📈 Governor expects growth in digital banks in Iraq.
• 🌍 Iraq aims to lead in digital banking compared to neighbors.
• 💰 Global financial transactions via digital banks reached $5 trillion.
• 📊 Anticipated growth to $7 trillion by 2027.
• 🏦 Over 70 applications for digital bank licenses submitted.
• 📚 In-depth studies conducted to establish licensing rules.
• ✅ Central Bank pr..FOR READ MORE: https://dinarevaluation.blogspot.com/2024/09/nader-from-mid-east-notes-highlights-14.html

• ---

•  Nader From The Mid East

    Everybody's saying there's a new category of currency come out in the streets of Iraq.   We heard it but we didn't see anything.  Nothing new, we still with the same currency.  For now didn't see anything. 

   Nader From The Mid East  

  Community comment: "Iraq is not a safe country." 

   Why?  United States a safe country? 

   When you look at Chicago, Philadelphia, New York and all that you think it's safe?  

  Fear.  Everywhere it's bad and good are everywhere...

  Tell you the truth it's safer in Iraq than Chicago.  Visit the country and then judge.  You cannot judge because you heard something on the news or somebody told you something.  I was there two weeks ago.  I've been going back and forth.  My kids been going back and forth.  Everybody's been happy.

  https://dinarevaluation.blogspot.com/2024/08/about-community-comment-iraq-is-not.html
• 
  

ECONOMIST'S BOLD PLAN TO FIX IRAQ'S DOLLAR EXCHANGE RATE

Iraqi Central Bank: The low price of oil has nothing to do with the high dollar exchange rates, 19 SEPT

 Mawazine News – Economy

The Governor of the Central Bank of Iraq, Ali Al-Alak, announced on Wednesday that all remittances would be subject to audits, while pointing out that the decline in oil prices has nothing to do with the rise in exchange.
According to the official agency, Al-Alak said that “the Central Bank provides the dollar at the official price for all commercial and personal channels, travelers and for all types of operations that represent legitimate activities, operations and requests.”

He pointed out that “any price outside the country is a price that is only indicated for the existence of abnormal operations that try to get out of the official and legal system and the correct fundamentalist channels,” stressing the need to “focus on the amount of sale made by the central bank at the official price and the demanders of the dollar, whether they are traders, importers, individuals or travelers.”

He pointed out that “ways have been put in place for each channel that ensures the provision of dollar on the one hand and a very large amount of control to verify the integrity of previous operations before their implementation,” pointing out that “this is a major shift in external transfers, as they were previously being scrutinized at a later stage, and today all transfers are not carried out and are not carried out until after they undergo the audit process.”
He pointed out that “the decline in the price of oil has nothing to do with the rise in the exchange rate because Iraq has reserves for foreign currencies, which enables it to defend the exchange rate.”

https://www.mawazin.net/Details.aspx?jimare=255061

LATEST FROM FNU LNU, 19 SEPT

 Fnu Lnu 

 I do not buy this "Education Program" nor do I buy the "Adjusting of the Parallel Market". The education is taking too long to be effective and it isn't government's job to adjust black markets. These are stall tactics while they placate the masses.  But why?...

  When you drag out the "Education" as long as the GOI and CBI has been doing, nothing sticks. If it is not in practice, then it is just words from the mouths of bureaucrats. Iraq has had more than enough of that and they do not pay attention.

 They will become educated when it means something to them, like the cost of goods and services, and buying power, and velocity of money. This is all obfuscation and I don't believe a word of it. Logic tells me they are stalling the people.

The $64,000.00 dollar question is why? What's the real plan?