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The Second Central Bank Strategy (2021-2023) Approach to monetary and financial reform

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The Second Central Bank Strategy (2021-2023) Approach to monetary and financial reform

Samir Al-Nusairi*

The Central Bank of Iraq launched its second strategy for the years (2021-2023) in conjunction with the economic and financial reform strategy adopted by the government in the white paper.

The new strategy has drawn a clear roadmap of goals and policies for the next three years in a special, complex and risky economic and financial circumstance. and challenges at the level of internal and external economic and financial relations.

What concerns us as specialists in economic, financial and banking affairs is what are the new mechanisms and policies adopted by the Central Bank in monetary policy and banking reform in accordance with the approach to the fundamental change desired for the national economy contained in the white paper and the second strategy, which constitutes the banking sector the first and basic link in the economy and implementer of monetary policy applications.

The strategy of the Central Bank set the basic objectives by 15 A goal and sub-goals by 75 goals and charted the way for banking reform in accordance with the following strategic goals:

1- Supporting and achieving monetary and financial stability.

2- Strengthening and strengthening the banking sector and financial institutions.

3 - Enhancing digital transformation in the central bank and the banking sector.

4-Developing the organizational structure and human resources of the Central Bank.

5-Activating and integrating the internal and external relations of the Bank to my center.

Since these strategic goals have been set for a period of time of three years to achieve the main and subsidiary goals, which emphasize the protection of the financial system, the promotion of financial inclusion, the management of monetary and financial stability, the development of control and supervision, the development of regulation in the banking sector, and the completion of the development of the monetary structure in the Central Bank And its branches in accordance with the frameworks and techniques used in the central banks, the development of human resources, the development of banking operations, the strengthening of the bank’s internal and external relations and its representation locally and internationally.

By analyzing the mechanisms and action points to achieve the above goals, we note that the strategy identified the planning team, implementation team, implementation mechanisms and responsibility, as well as clear priorities for achieving reform.

Certainly, these priorities were diagnosed in light of the challenges faced by the monetary policy and the banking sector due to the economic and financial crisis The suffocation that Iraq has suffered for subjective and objective reasons, which can be diagnosed as follows: ‐

* Work to achieve monetary policy objectives, the most important of which are the stability of the exchange rate, maintaining the purchasing power of the Iraqi dinar, the inflation rate, and building a foreign cash reserve.

* Work to restore the confidence of citizens and customers in the Iraqi banking sector.

* Work to increase the percentage of savings for the monetary mass in circulation in banks to the percentage of hoarding outside banks, where the percentage of savings in the banking sector does not exceed 20% and the percentage of hoarding is up to 80%.

The percentage of financial inclusion and the delivery of banking services to the widest spread of the geographical area at the level of governorates, districts and districts, and the increase in banking density in this direction.

* The need to complete the structural foundations and Technology for proactive control.

*Activate and reconsider the development of work mechanisms in the Deposit Insurance Company.

*Reconsider the laws of the legislative environment that regulate banking work.

* Reviewing and evaluating the results of banks' business and re-classifying them by accredited international companies.

Determining weak banks that need the intervention of the Central Bank of Iraq to rehabilitate them, restore their activity and protect them from bankruptcy.

* Demand government support in accordance with previous decisions and instructions issued by the Council of Ministers, the Economic Affairs Committee and the Ministerial Council for the Economy.

* Strengthening and activating initiatives The Central Bank lending and financing for small, medium, housing and large projects, which contributes to stimulating the economy, revitalizing the economic cycle, and diversifying the resources of the general budget.

Therefore, and for the purpose of applying the banking reform approach, according to what was stated in the strategy, according to an insight into the priorities and challenges that the Iraqi banking sector suffers from, the Central Bank made exceptional efforts during this year 2021, and many of the main and subsidiary goals were achieved, and it is trying to complete the achievement of all goals in 2023. It is the last year of the strategy.

Therefore, the Central Bank's strategy has proven that it established, planned and defined a line Watt advanced on the path of systematic application of the desired banking reform.

* Economic and banking advisor
Number of views 273 Date of addition 10/13/2021

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