Abstract
The provision of credit is no longer a casual event that a person can do without by relying on aid, charity, or donations. Instead, it has become a necessity of modern life on one hand, and a binding obligation on the part of the credit institution providing it on the other—an obligation that cannot be avoided except for a compelling reason. Requesting credit has become a right for the applicant, something indispensable and irreplaceable in our current era.
On the other hand, credit institutions, despite all their financial capabilities, have become incapable of meeting the growing demand for financing. No single institution, whether governmental or private, can independently satisfy society’s increasing need for credit—even if the state itself assumes the responsibility for providing it.
Credit institutions are diverse, as are their financing purposes and the laws governing them. This diversity results in differing priorities for their financing operations, credit provision, and dispute resolution due to variations in their nature and modes of operation. Some of these institutions are governmental administrative bodies, while others are privately owned entities.
Among them are institutions responsible for crafting and directing the country's monetary policy, such as the monetary authority represented by the central bank, and others that shape the country’s fiscal policy, like the financial authority represented by the Ministry of Finance. There are also monetary institutions such as commercial banks, which receive depositors' funds, and financial institutions that rely on their own funding sources, such as specialized banks.
The more these entities are financed, the higher the demand for their services becomes.
Modern financial legislations have reached a satisfactory solution to meet the growing need for credit by channeling societal funds into the very institutions that provide credit. As a result, society has effectively become both debtor and creditor to itself, financing itself through mechanisms resembling multi-layered circular movements.
Credit institutions are funded by the returns they generate from investing people’s money in investment funds, securities portfolios, and investment trusts—structures well-established in English law but unfamiliar in civil law countries like France, Egypt, and Iraq. Additionally, there are also credit obligations through which credit institutions obtain periodic returns by establishing them. Finally, there is the securitization of debt, through which these institutions can rapidly secure funding based on the credit they had previously extended.
These are all complex matters, the majority of which are not yet addressed by Iraqi law at present. Therefore, we present to the Iraqi legislator the issue of financing these institutions, in order to fill the legislative gap and to encourage the development of the legal framework for a policy of refinancing Iraqi credit institutions by the very society they serve. This would establish a circular financing system through which society finances itself — the most effective and beneficial form of funding.