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Central Bank of Iraq Seeks to Strengthen Economy through Islamic Banking and Organizational Development

Baghdad, Iraq - In its ongoing efforts to stabilize the economy and promote financial stability, the Central Bank of Iraq has launched several initiatives aimed at developing the country’s banking sector. The bank’s strategy focuses on strengthening the real economy by promoting Islamic banking practices, improving organizational structure, and enhancing payment systems.

Developing Islamic Banking Practices

According to a report released by the Central Bank, the first strategic objective is to develop Islamic banking practices in Iraq. To achieve this goal, the bank has:

  • Established an Islamic certificates of Deposit (ICD) system
  • Issued risk management controls for Islamic banks
  • Merged and unified Islamic banks under one umbrella
  • Set up a supreme Sharia advisory committee to ensure compliance with Islamic financial principles

The report highlights the success of these initiatives, including:

  • The issuance of investment certificates for Islamic banking
  • The development of pooled Islamic financing programs (SIFP)

The SIFP program aims to finance important strategic projects aimed at achieving economic growth and stability in Iraq.

Enhancing Banking Stability

To further strengthen the real economy, the Central Bank has launched a deposit insurance institution, which is designed to:

  • Protect small depositors
  • Enhance banking stability

The bank has also established a system for exchanging credit information in accordance with international standards, facilitating banking supervision and control operations.

Organizational Development

In addition, the Central Bank has developed its organizational structure to keep pace with changes in the global financial sector. The bank has adopted a project to develop its organization and operations, which includes:

  • Developing a sound organizational structure
  • Operating model that takes into account regulatory requirements

The report highlights several achievements under this strategy, including:

  • Unification of security specifications for cheques
  • Adoption of the International Banking Account Number (IBAN)
  • Establishment of a department concerned with risk management
  • Comprehensive supervisory instruction system in accordance with international standards to support business continuity in banks

National Payments Board

Furthermore, the Central Bank has established the Iraqi National Payments Board, which acts as an advisory link to:

  • Support the bank in defining payment systems objectives
  • Developing strategies for their development
  • Following up on their implementation

The board began its work in May 2018.

Conclusion

The report concludes that these initiatives are designed to strengthen the real economy by promoting Islamic banking practices, improving organizational structure, and enhancing payment systems. These efforts aim to achieve financial stability, promote sustainable development, and support economic prosperity for Iraq.