Shafaq News – Baghdad

The new Central Bank of Iraq’s (CBI) reforms could hand control of the country’s financial system to foreign lenders, lawmaker Haitham al-Fahad warned on Tuesday, calling the plan a threat to Iraq’s monetary independence.

Al-Fahad, from the Asas (Foundation) Parliamentary Bloc, told Shafaq News that the banking reform paper “was drafted under US Federal Reserve guidelines and sent from Washington to Baghdad,” arguing it allows foreign banks to dominate the Iraqi market.

He said the regulations favor institutions with Jordanian, Emirati, Bahraini, and Kuwaiti capital, which quickly raised their capital from 200 to 400 billion dinars (over $300 million), while local banks struggle to keep pace. “Iraq’s financial policy is increasingly tied to foreign capital,” al-Fahd said, warning that any disruption to those banks could trigger a major economic paralysis.

CBI has ordered all banks to raise their capital to 400 billion dinars by December 31, 2025, as part of a sector-wide reform push. Economists warn the deadline will be difficult to meet amid sanctions and weak investor confidence.

Read more: Iraqi Banking reform: Between necessary change and crippling conditions