Letter of credit (L/C) business in Iraq is increasing as violence in the country has dropped to a four-year low

The increase in L/C business fits with growth across country's banking sector with lending, deposits and electronic transfers all up sharply in recent months according to US embassy statistics.

Values outstanding

The value of L/Cs outstanding in March 2008 was more than double the value outstanding in October 2007.

The total value of L/Cs outstanding in March 2008 had reached US$189 million according to the US embassy.

Significant increases

It said the volume of loans issued by private banks in February was also up by almost half to US$755 million compared with October.

The figures may be small by international banking standards, but the increases are considered significant for a country rebuilding a financial sector riven by years of war and sanctions.

Private banks

The report says about half of Iraq's 41 licensed banks now have SWIFT, but many large transactions in Iraq are still conducted in cash.

Although private sector banking in Iraq is growing, over 90 per cent of bank deposits remain held by the two largest state-owned banks, according to the report.

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