Iraq entering the age of islamic banks

[J Sue]

Iraq entering the age of islamic banks

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Iraq has approved the construction of a government Islamic bank with capital reaching 250 billion dinars (about $214 million). The new bank will be under the supervision of the Central Bank of IraqCentral Bank of IraqCentral Bank of Iraq

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and will be administratively linked to the Finance Ministry.

An Iraqi official confirmed that the Islamic bank will work to attract significant capital and will contribute to the process of integrating governmental and private banks. The Iraqi government also decided to allow the operation of Windows in governmental banks.

The Economic Committee of the Iraqi Council previously announced that Islamic banks, of which there are nine, don't contribute to raising the economic development level, while experts found that the private banks in Iraq, of which there are 36, don't have the tools to promote monetary and economic policies for several reasons, including a missing law organizing operations and the failure to secure the required support from the country. For example, the Rafidain Bank, one of the most important governmental banks in Iraq, doesn't accept transfers from private banks (including Islamic banks) and the Finance Ministry refuses to deal with private banks (including Islamic ones).

The Executive Director of the Association of Iraqi Private Banks, Faiq Nasser Hussain, announced that Iraqi governmental banks shouldn't operate pursuant to the Islamic banking system because Islamic bank budgets are different from the budgets of traditional commercial banks. He noted that the Central Bank of Iraq...

finally put it to a committee to draft a law for this sector.

. recently announced that it will grant a number of licenses to establish private banks, confirming that their growth will enhance the economic situation in the country. The total capital of private banks is about $2.7 billion dollars and expected to rise to 100 billion dinars by the end of June, reaching 250 billion by the end of 2012.

The two main purposes of the Central Bank of IraqCentral Bank of IraqCentral Bank of Iraq

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are to: maintain price stability and implement monetary policy, including exchange rate policies, management of foreign reserves, currency issuance, management, and organizing internal and external payments.

http://www.zawya.com/story.cfm/sidZAWYA20110712100750/Iraq_entering_the_age_of_islamic_banks