The Impact of Dual Banking Systems on the Iraqi Economy
Economic researcher Manar Al-Ubaidi has expressed concerns regarding the existence of both an official and a parallel banking system in Iraq, which poses significant challenges to the country’s economic stability. According to Al-Ubaidi, this dual system exacerbates the shadow economy, undermining the formal financial sector’s effectiveness and reducing the government’s ability to regulate and monitor financial activities effectively.
Challenges Posed by the Parallel Banking System
Al-Ubaidi’s analysis indicates that the parallel banking system fosters a lack of transparency and accountability, which can lead to various economic inefficiencies. Specifically, the shadow economy remains largely unregulated, making it difficult for the Iraqi government to implement effective monetary and fiscal policies. As a result, crucial data on monetary flows and economic activity is often obscured, complicating economic planning and policy formulation.
Implications for Policy and Governance
The researcher emphasized that the persistence of these dual banking systems could impede economic growth and development within Iraq. It poses a direct challenge to efforts aimed at enhancing the financial sector’s integrity and reliability. Additionally, it highlights the necessity for comprehensive reforms that address the regulatory framework governing financial institutions to ensure a more cohesive and productive banking environment.
In conclusion, tackling the issues posed by the presence of a dual banking system is essential for fostering a robust and resilient Iraqi economy. A coordinated approach that integrates both banking systems under a single regulatory framework could enhance transparency, promote economic stability, and drive the country toward sustainable growth.