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m Monetics
Iraqi payment systems
support for successful
projects in Kurdistan
m MoneticsReview, planning, project management
Banking & payment systems, mobile, cards, e-banks
10 June 2014
Philip Corper
Executive Associate
m Monetics
The CBI strategy has five key objectives
• Stabilise the exchange rate
• Implement the monetary policy
efficiently
• Manage foreign reserves
• Issue and manage the currency
• Control the banking sector to
promote a competitive and
stable financial system.
2
m Monetics
Technology is central to implementing the CBI strategy
The Central Bank of Iraq has been
working since 2004 to develop and
integrate its technology infrastructure
through:
• Legal and regulatory frameworks
• Communication network
• Modern systems
• Global standards
• Capacity building
The CBI approach and vision is
becoming a role model for other Iraqi
government institutions on how to
cooperate to integrate e-governance
components3
m Monetics
There are four components to the Iraqi Payment Systems
• RTGS – Real Time Gross
Settlement for high value and urgent
payments in real-time –
implemented in 2006
• CSD – Central Securities Depository
registration of the securities issued
by CBI and MoF implemented in
2008
• CACH – Cheque Enabled
Automated Clearing House for lower
value, bulk payments and cheques –
implemented in 2008
• Electronic Cheque Clearing system
– implemented by private banks in
2011 and by State-owned banks in
2013
• RPSI – Retail Payment System
Infrastructure – currently in progress4
PKI
RTGS
CACH CSD
Inter-bank
clearing and settlement
Payment systems are
integrated using PKI
(Public Key Infrastructure)
encryption
m Monetics
Wholesale payment systems were the first priority
• The wholesale and inter-
bank payment systems are
critical enablers which
underpin the whole banking
and economic system in
Iraq
• Low payment volumes
indicate low banking and
economic activity–Iraq
remains a ‘cash economy’
• Volume will increase by:
• Mandating migration from
cheques to electronic
payments
• implementing retail
payment systems and
making them universally
available5
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2011 2012 2013
Transactions per year
Wholesale payment volumes
RTGS
CACH -cheques
CACH -electronicpayments
m Monetics
Retail payment systems will dominate the future
Building the Iraqi
Payment Systems
will enable Iraqi
banks, businesses
and people to ‘leap
frog’ to the latest
technology and
services
6
cheques banknoteselectronic
payments
mobile
payments
20,700,000
96% of Iraqi
adults have
no current
account
50,000
0.2% have
payment cards
900,000
4% of Iraqi adults
have current
accounts
(21,600,00 adults)
32,000,000
>97% of Iraqi
adults
have mobile
phones
(many have
more than one
phone)
PresentPast
m Monetics
The Retail Payment Systems Infrastructure project
• Pilots of the RPSI will start in
Summer 2014:
• INRS – Iraqi National Retail
Switch will support EMV smart
card transactions via ATMs, POS
and the Internet
7
PKI
RTGS
CACH CSD
INRS
Acquiring
banks
Issuing
banks
Net
settlement
Transactions
Authorisation
& clearing
POSATMs
Card
holders
Internet
portal
m Monetics
The Retail Payment Systems Infrastructure project
• Pilots of the RPSI will start in
Summer 2014:
• INRS – Iraqi National Retail
Switch will support EMV smart
card transactions via ATMs, POS
and the Internet
• IIMPS – Iraqi Interoperable Mobile
Payment System will support
mobile payments without
depending on conventional banks
accounts
• The RPSI will be interoperable
with mandatory national standards
• All transactions will be cleared
and settled in Iraq
• Participation will be universal after
the pilots
8
PKI
RTGS
CACH
Mobile
Networks
CSD
IIMPS
INRS
Acquiring
banks
Issuing
banks
Net
settlement
Transactions
Authorisation
& clearing
POSATMs
Card
holders
Internet
portal
Call centre &
Interactive Voice
Response system
Mobile
phones
m Monetics
The Iraqi Payment Systems depend on telecommunications
• The CBI built the Iraqi Inter-
Bank Network (IIBN) in
2008
• The IIBN uses Wi-MAX high
bandwidth technology to
transmit high volume digital
data between banks
• 48 banks are connected, as
well as the Ministry of
Finance, the General
Commission of Taxes and
The General Commission of
Customs
• The IIBN is being upgraded
to support the RPSI and to
install fibre-optic links
alongside existing wireless
microwave links9
m Monetics
The CBI is reforming banking laws and regulations
• The CBI is leading revision
of the banking laws:
• CBI Law
• Banking Law
• Anti-Money Laundering
Law
• The Electronic Payment
Services Regulation has
been approved by the
Council of Ministers
• The CBI will now issue
detailed technical
instructions and financial
instructions to Payment
Service Providers (PSPs)
• The CBI has issued the
credit information
instructions10
The Council of Ministers approves the
Electronic Payment Services Regulation
m Monetics
Development of Iraqi Payment Systems is continuing
Additional projects are under
way to modernise and sustain
the Iraqi Payments Systems
• An national International Bank
Account Number (IBAN)
standard is being introduced
• An automated clearing system
will facilitate processing
transactions between
ministries and institutions
• Iraq will participate in the
regional payment system of
the Arab Monetary Fund
• Security features of cheques
are being upgraded
• The security features and
durability of bank notes are
being upgraded11
• SPARK optical
features
• Dynamic ink
colours
• Magnetic
threads
• Protective
films
m Monetics
The CBI is also improving security and managing risk
• Anti-Money Laundering (AML)
and Countering the Financing of
Terrorism (CFT) processes are
in accordance with the
standards
• A national Credit Information
Bureau (CIB) is being built
• All CBI systems comply with
international standards, are
resilient and have backup,
disaster recovery and business
continuity facilities and
processes
12
m Monetics
The CBI is continuing to modernise itself and Iraqi banks
Additional projects are under way
to modernise the Iraqi banks
• The CBI core banking system
will be replaced
• A securities trading system
(related to the CSD) is being
implemented
• Electronic financial reporting will
be introduced using XBRL
standards
• A Banking & Finance Academy
has been established in Erbil
and a Banking Studies Centre
in Baghdad
• New cultures are being
encouraged in banks which will
make use of the new skills
technologies and data13
m Monetics
The Iraqi Payment Systems benefit all projects and businesses
• Processing high value transactions
and low value transactions quickly,
securely and transparently
• Connecting all banks directly to
CBI to support the exchange of
transactions
• Providing holistic information about
cash management
• Maintaining the confidentiality of
the information and reduce the
risks of the paperwork
• Reducing dependency on
banknotes and instruments
• Leading the migration from cash
• Diving economic growth
• Improving the climate for
investment in Iraq14
m Monetics
The Iraqi Payment Systems will develop all regions’ economies
• The CBI and the banks have been
working to build modern payment
systems for a decade, with support
from US Treasury and USAID
• The basic infrastructure has been
in place for several years and is
proven
• Now the introduction of national
electronic retail payment systems
will move payment services
throughout Iraq to a new level
• People and businesses in all
regions of Iraq will benefit from
embracing the new system and
initiatives
• This will greatly aid the economic
development of the country and
regions.15