24 September 2021
Central Bank of Iraq (CBI) is among AFI’s newest members, having joined in January 2021 to harness the network’s unique peer learning and exchange model to drive the development and implementation of Iraq’s first-ever national financial inclusion strategy. In his first leaders’ perspectives blog for the AFI network, Governor Mustafa Ghaleb outlines some of CBI’s recent milestone achievements in financial inclusion and the steps being taken to encourage the greater use of digital financial services and financial technologies.
Financial inclusion is the main pillar for enhancing the use and ease of access to financial and banking services in Iraq, leading to greater supply and demand. CBI has consistently promoted financial inclusion across the country, notably, by setting it as an objective in its strategic plan for 2016-2020, and by joining the Arab region’s Financial Inclusion Task Force (FITF) in 2016.
Fostering further financial inclusion was the establishment of the Supreme Committee for Financial Inclusion and related subcommittees, which includes both public and private stakeholders. Since then, the central bank has implemented various projects such as the collection of supply and demand data indicators, including bank account ownerships and use of electronic payment tools, to measure progress, and conducted awareness raising campaigns to enhance financial literacy and improve the protection of financial consumers.
Regulatory frameworks and supervision process were also developed to ensure a sound legal environment for all concerned parties. The central bank has also defined legal and regulatory frameworks for licensing payment service providers and the work of their agents in encouraging financial inclusion through the provision of digital financial services. This is in addition to regulating the governance and institutional management of information and communication technology in the financial and banking sectors. We are also working on a Payment Law, which was prepared in coordination with stakeholders and international bodies. It is now in the legislative stage.
In terms of infrastructure development, CBI has modernized payment systems, established a national switch, data centers and disaster recovery centers, and developed infrastructure for information and communication technology within best international practices.
Furthermore, it facilitated electronic transfers between countries in the region by participating in the Buna payment platform, which provides real-time settlement services for cross-border financial transfers in Arab and international currencies. Payments can be sent and received in a safe and reliable manner that reduce recourse to global centers from correspondent banks in settling Arab payments, lowering the associated time and costs for banks and customers.
As for the private sector, CBI established a mechanism to facilitate international settlements of electronic payment cards and external transfers to reduce costs and increase the speed of payments. To that end, it signed a memorandum of understanding with money transfer companies Western Union and MoneyGram to regulate overseas transfers that take place through agents of the two companies in Iraq.
On the regional side, CBI strengthened its collaboration with the Financial Inclusion in the Arab Region Initiative (FIARI), a platform supported since 2017 by AFI, the Arab Monetary Fund, GIZ and World Bank to strengthen financial inclusion in the Arab region. Created amid growing demand from AFI member institutions, FIARI aims to tailor solutions to regional financial inclusion issues.
Looking ahead, the central bank is taking steps towards applying financial technologies in the financial and banking sectors, according to international standards and best practices. Supporting digital financial services that contribute to enhancing financial inclusion is among the objectives of CBI strategic plan for 2021-2023, through:
The central bank has made significant progress towards achieving sustainable goals in financial inclusion, particularly in digital services. In the Arab region, Iraq remains a key supporter of greater financial inclusion, especially towards typically excluded groups – such as youth, forcibly displaced people, small businesses and women – for whom the potential opportunities are as great as the challenges.
We are encouraged by the ongoing development of Iraq’s national financial inclusion strategy, a key priority for CBI. The strategy will allow the collection of relevant data to monitor the progress and impact of financial inclusion on the population. CBI’s membership of AFI will also support the central bank on its financial inclusion journey and efforts to strengthen relevant policies and regulation for the benefit of future generations.