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Enorrste – I found the forum commentary to be quite interesting. I tend to agree somewhat with Mike, however, in that I don't think it moves the ball very far one way or the other.
Having said that, though, I would offer these few comments:
Enorrste – “Achieving Growth in Contexts of Great Challenge: The Iraqi Private Banking Sector” The very fact that this conference exists is a good sign.
It shows that all parties are aware of the problem and are attempting to work out a solution.
The issue of whether any bank coming into a correspondent relationship will find it likely that they will make money is a serious concern. …
At the same time there was a clear understanding by one of the members of the “wild west” theory that KAP [Kaperoni] and I have talked about for years. She said almost the same thing we have been saying all along, namely that once the movement begins it will snowball and lead to very rapid economic growth in Iraq.
It is the beginning of the snowball that is the current problem. Several members indicated that the laws and regulations are now in place, but that implementation is what is lacking.
This, to me, is a positive step. I think that this is a lot like the snowball affect that I just mentioned: it just needs to get started. Once it does the confidence level will rise in bank usage. Once that happens foreign banks will want to get involved as well.
It is a positive sign to me that all of the representatives on this panel recognize the liquidity problem and understand that getting the money out of the mattresses is the solution.
I would venture to guess that the CBI has a plan to push this process along, even to the point of forcing people to use their mattress money if necessary.
As with my other comments above I believe that this snowball affect will be the most important, once it begins.
The statement by one of the Iraqi bankers...was quite revealing, namely that he appealed to the CBI to just given the banks a checklist of things that need to be done to bring them into full compliance.
I would wager that this proposal will be acted upon quickly by the CBI, once it is presented to them, and that full compliance across the board will occur shortly thereafter.
One thing is clear: all of the Iraqi bank representatives expressed a deep desire to be fully compliant. The statement was simple: "Just tell us what to do and we will do it!"
To sum up: I find this to be a very positive event overall, even though it consists merely of statements of intent rather than lists of actual accomplishments.
It clearly shows that a lot of progress has been made over the last 3 or 4 years.
Therefore, it is my view that once this last hurdle is overcome (getting people to actually use the banks), that foreign investors, who are begging to get into Iraq due to the huge potential, will jump on board as soon as it is economically feasible to do so. Enorrste
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