The US Treasury Department has signaled that rebuilding Iraq’s banking sector will be a multi-year endeavor, setting expectations for a protracted normalization of financial infrastructure in Baghdad.
The assessment comes as Washington navigates the complex intersection of post-conflict reconstruction and ongoing sanctions enforcement, particularly regarding institutions linked to Prime Minister Ali Al Zaidi that remain barred from dollar access.
The announcement underscores the structural hurdles facing Iraqi financial markets, which have been constrained by geopolitical tensions and regulatory restrictions.
While the US government acknowledges the necessity of a functional banking system for Iraq’s economic recovery, the timeline suggests that immediate liquidity improvements or full reintegration into global dollar-clearing systems are unlikely in the short term.
This reality adds a layer of caution for investors and institutions monitoring the region’s financial reopening.
The development arrives against a backdrop of heightened volatility in global fixed-income markets.