3 days ago
Iraq's Central Bank faces last chance to reform banking sector
Baghdad ( – Iraq's Central Bank (CBI) is facing a critical deadline with less than two weeks for private banks to implement the reform roadmap proposed by the American company 'Oliver Wyman.' Failure to do so could lead to the direct intervention of the US Federal Reserve and the US Treasury, a scenario Baghdad is eager to avoid to protect its sovereignty and reputation.
For years, the US Federal Reserve and Treasury have maintained a strict policy with the CBI, which led to approximately 50% of Iraqi banks being excluded from dealing in US Dollars due to sanctions and restrictions. During this period, the Federal Reserve imposed numerous requirements to enhance compliance, including the expansion of direct transfers and electronic payments, and the consolidation of banks through mergers and liquidation, along with changes in ownership and capitalization structures.
This situation put the CBI in a difficult position, caught between the demands of the US Federal Reserve and powerful domestic interests that own and operate dozens of banks, which profit from the flow of US Dollars. As a compromise, the CBI commissioned 'Oliver Wyman,' a US-based firm with ties to the Federal Reserve and the Treasury, to evaluate the Iraqi banking system and present a reform plan.
The resulting plan, presented by the consulting firm, mirrors the very requirements that the Federal Reserve and Treasury had demanded in the previous year. This suggests the CBI received the federal requirements indirectly, a tactic that appears to be a way to cover for direct US intervention in reforming the Iraqi banking system.
The plan is now ready for implementation, but according to economic expert Ziyad Al-Hashimi, there are 'benefiting parties' working behind the scenes to obstruct the reforms. Al-Hashimi warns that if the CBI fails to enforce the plan, the Federal Reserve and Treasury will return to direct intervention and pressure, or impose even more stringent measures and sanctions. The CBI is working diligently to avoid this direct intervention to protect its reputation and assert its independence, a task that requires a firm stance against internal pressures.
