Doing away with cash as the main form of payment would reduce the threat of highway robbery, which hinders fund transfers within the country, some bankers say. In turn, a reliable network for electronic transactions would undercut an insurgency eager to deal in cash and spur reconstruction, finance officials say.
Revamped financial services will be essential for kicking reconstruction into a higher gear at ground level, says Bill Taylor, director of the Iraq Reconstruction Management Office (IRMO).
Contractors on US-funded reconstruction projects - including some US companies - are already turning to the local banking system as an alternative to carrying large amounts of cash on planes, bank executive Munther al-Fettal says.
Banks have become the strongest earners on the local stock exchange since the invasion two years ago. Speculation about incoming foreign investment has fueled dramatic gains in recent weeks, though shares in "real industries" are in a severe slump, says Mr. Fettal.
Several newly licensed local banks, meanwhile, are planning to expand their reach. The Kurdish family-controlled North Bank, started in Baghdad in 2004, recently opened a second branch in the northern city of Sulaymaniyah. Further expansion is also directed at the Kurdish-dominated north, says Nafie Alais Aboo, the bank's assistant managing director.
The CBI is encouraging other new banks to focus on impoverished areas in southern Iraq, some of which have almost no financial services, Shabibi says.
Source: ABC News
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