In spite of implementing widespread change programs to promote the banking system, from the law for usury free banking to privatization, banking system inefficiency is still one of the most important economic challenges in the country. Basic assumption of mechanism design theory to explain this failure is existence of destructive conflicts in the system. The purpose of this study is to diagnosis of these conflicts and to propose of approaches to resolve them. Therefore, a graph model, with a holistic view, developed to describe the behavior of main players in the banking system and analyzed its equilibrium states. The results showed that the existence of conflicts is one of the most important causes of inefficiency of the system in performing its expected functions. Main drivers of the conflicts are deviation in relative prices due to the Dutch disease and myopic in decision making in macro and middle levels of governance of the system. In this study, Inverse GMCR method was used to investigate the institutional functions required to conflict resolution. The results showed that monetary policy maker independence from government, reduction of government budget dependence on oil, clarification of life cycle costs (LCC) of macroeconomic policies, approaches to resolve these conflicts. Whatever country fails in implementing above approaches to correct deviation in relative prices, central bank should use its governance power more to control market forces in the banking system.