Prudential Regulation and Supervision of the Iraqi Banking System
The development and implantation of a new prudential regulation protocol; what systems banks should adopt to monitor credit risk, operational risk and interest rate risk; the effects of the new secured transactions law on the banking industry.

Panel Participants

• Moderator: Martin Wiseman, Bank Supervision Advisor, Office of the Treasury Attaché, US Embassy
• Dr. Mudher Qassim Saleh, Advisor, Central Bank of Iraq
• Waleed Eidy, Assistant Director General, Supervision Deptartment, Central Bank of Iraq
• Andrew Cunningham, Managing Director for Middle East and Balkan Region, Financial Services Volunteer Corps (FSVC)
• Hussein Al-Uzri, General Manager, Trade Bank of Iraq

Topics Discussed

1. Prudential regulation and supervision of the Iraqi banking system
   1. The current prudential regulation regime:  The Central Bank Law and Commercial Banking Laws enacted under the CPA in 2004
   2. Inadequacy of the current prudential regulation regime and suggested enhancements/policy and procedure revision
   3. Development and adoption of a new set of prudential regulations to implement fully the Central Bank and Commercial Banking Laws
   4. Adoption of international best practices for bank supervision, to include:
1. On-site inspections
2. Off-site monitoring
5. Development of a central database of banking sector statistics
6. Adoption of international best practices for internal controls at both the Central Bank and the commercial banks
2. Risk management systems of commercial banks / the lending function
1. Monitoring of new loan classification and provisioning policies
2. Monitoring of new insider lending provisions
3. Encouraging lending to strategic sectors (SMEs) by establishing a favorable lending rate regime versus pressures to combat inflation by raising rates
4. Ensuring Central Bank involvement in bank training and capacity building programs going forward
3. The new secured transactions law

Reference Works

Bank for International Settlements (BIS), Basel Committee on Banking Supervision.  "Core Principles for Effective Banking Supervision".  September 1997. Online. Available: http://www.bis.org/publ/bcbs30a.htm

BearingPoint. "Concepts of Prudential Supervision". April 2007.

Central Bank of Iraq.  “Instructions to Banks Regarding Credit Portfolio”.

Frederic S. Mishkin.  "Prudential Supervision: Why Is It Important and What Are the Issues?". NBER Working Paper Series: Working Paper No. 7926. September 2000.   Available: http://www.nber.org/papers/w7926.

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