Comparative Analysis between Central Bank in Iraq and UK and the recommendations to Improve Iraqi Central Bank

Introduction

Bank or banking system refers to the set of institutions that enable the development of all transactions between individuals, companies and organizations that involve in the use of money. Within the banking system, one can distinguish between public and private banks, which in turn reflect the nature of banks, which can be commercial, industrial or mixed business. The private commercial banks are primarily concerned with providing loans to private individuals. Industrial or business banks invest its assets in industries. Mixed private banking combines both types of activities. In the nineteenth century, industrial banks were very common although they have been losing strength during the twentieth century in favor of mixed banking. However, the public banks issue is responsible for issuing currency to private banks thus central bank has got the monopoly on printing money which belong to the State. The main role of a bank is to keep external funds on deposit as well as to provide safe transactions denominated liabilities. For the protection of these funds banks charge a number of committees which also apply to the various services that modern banks offer to their customers, these services include more competitive framework: credit cards, overdraft, telephone bank, among others.

There is no country in this world that is without banks due to its importance. Bank performs an intermediary role. First of receiving money from savers and on the other hand lend it to individuals and companies to assist in the growth of the economy of a country. In addition through the banking system payments operates in the country through checking accounts, credit cards and money orders, among others. Suffice it to mention that in England 90% of all transactions that take place in the economy are made through banks. The banking system is crucial in the growth and development of any country and the country like Iraq whose banking system badly damaged because of war and the country is willing to work for the betterment of the economy requires a strong banking system to support the growth of the country. On the other hand the banking system of England is considered one of the most effective versions of banking system in the world since its introduction of reforms, which transfer most the authority to regulate the banking system to Financial Service Authority (FSA) and the central bank that is Bank of England would only monitor the banks. In this study, firstly the banking system of England will be discussed followed by Iraqi banking system as to provide the current position of Central Bank or Iraq and Bank of England as central banks are the major regulators of all the banking related activities. A better understanding of the systems would help in this study to compare the central banks of both countries and to make suggestion that what features of Bank of England should be adopted by Central Bank of Iraq in order to strengthen ...