The Central Bank of Iraq says the country's private banks will soon be able to handle international payments and foreign currency letters of credit (L/Cs) worth up to US$4 million each.

Iraq's 30 private banks have hitherto only been able to issue L/Cs up to a value of just US$1 million, according to Iraq's finance minister, Bayan Jabor.

Conditions

When the minister told a 28 January banking conference in Baghdad of the higher limit for L/Cs, he added that L/Cs would be governed by a set of conditions to be issued by the central bank.

Jabor also cautioned that private banks must have the facilities to handle such transactions.

International capabilities

Iraq's private banks generally lack effective cross-border payment capabilities. Most of the banks are small and can only support limited amounts of commercial trade business.

The state-run Trade Bank of Iraq manages most of Iraq's L/Cs. Jabor said it issued some US$9 billion of L/Cs in 2008 for the Iraqi public sector.

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