Baghdad – IA – Hassan Al-Fawaz
Central Bank Governor Ali Al-Alaq announced on Monday that the banking sector is witnessing major qualitative developments, while calling for cooperation and coordination between Arab central banks, banks and non-banking financial institutions to achieve stability and economic growth.
Al-Alaq said during the conference “The Challenges Facing Arab Banks in Complying with International Laws and Legislation and Meeting the Requirements of Correspondent Banks,” held in Baghdad in the presence of a large number of Arab banking and economic officials, and attended by the correspondent of the (INA): “I am pleased to welcome you to your second country.” Iraq, I extend my thanks and gratitude to the Board of Directors of the Union of Arab Banks, the Secretary-General of the Association of Iraqi Private Banks, and to everyone who contributed to enabling the holding of this conference, the importance of which is not hidden from everyone in the context of the many cooperation and partnerships that the Central Bank of Iraq establishes with various Arab and international organizations and institutions and its openness to them with a view to Exchanging experiences and improving performance in the banking and financial sector.”
He added, “This reflects the compatibility of development visions and strategic objectives with regard to the topics being addressed, which focus on fundamental and fundamental areas, such as supporting economic development, combating money laundering and terrorist financing, digitizing financial and banking services and products, electronic payments, and achieving financial inclusion goals.” Pointing out that “these issues directly affect the economy and the lives of citizens, as it is not possible to research the reality of the banking sector and the reality of banks apart from the overall economy.”
Al-Alaq stressed that “central banks faced increasing challenges after decades of traditional functions and tasks, which could be close to static, until each period brought different challenges that required a special approach to confront them,” pointing out that “after long periods of decline in interest rates and inflation, The global economy has begun to face a phase characterized by high inflation and high levels of public and private debt, which has called on central banks to sense the urgent need to include financial stability and concerns about deflation within their economic models and to develop unconventional tools to deal with them.
He continued, “The financial crisis in 2008 was followed by a series of challenges, as public debt rose and the rush to raise interest rates to confront inflation threats made servicing the public debt more expensive. Here, it is difficult to balance in achieving intersecting goals that make it difficult to approach them,” pointing out that “since… “The Corona crisis has become clear that public financial policy can correct one of the factors driving increased inflation.”
He stated that “the nature of shocks and the frequency of their occurrence have changed locally and internationally, as shocks historically occurred due to increased or decreased demand, with the exception of supply shocks, which is known as stagflation in the 1970s of the last century,” pointing out that “there are many shocks today, including demand versus supply, and special risks versus Systemic risks, transient versus permanent shocks, which requires a modified approach in the face of sudden and unexpected changes.”
He stated that “central banks face new challenges in the interaction between financial and monetary stability, in light of the dominance of general financial policy and the necessity of central banks to facilitate excessive government debts, in accordance with financial control, which requires reducing spending or increasing domestic revenues, or both.”
He stated that “over the past 10 years, the Iraqi banking sector has witnessed significant qualitative developments in response to the adoptions and policies of the Central Bank of Iraq, as it introduced and applied for the first time the concepts and practices of compliance rules, governance, risk management, prudential oversight, risk-based oversight, comprehensive quality management, business continuity, digital services, and financial inclusion.”
He stated that “despite all these developments, there remain major and mounting challenges represented by the challenges of compliance with international laws, legislation, requirements and standards,” explaining that “these challenges have a direct connection and impact on the openness of local financial institutions to their international counterparts.”
He stressed that “to the extent that all of this achieves communication and connection with the outside world, it undoubtedly carries many challenges and implications,” expressing his hope that “this conference will succeed in satisfying it, reaching effective solutions to this challenge, and devoting cooperation and coordination between Arab central banks and Arab banks.” and non-banking financial institutions, to achieve stability and growth.”