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In this paper, we focus on two-channel perfect reconstruction IIR filter banks. Often two-channel FIR filter banks with additional characteristics such as the perfect reconstruction property and linear phase are used in subband systems. This type of filter banks belongs to the class called biorthogonal filter banks. While several works have pointed out that the perfect reconstruction IIR filter banks have both linear phase and orthogonality, the linear phase orthogonal IIR filter banks have never been applied to image coding. Then we apply the two-channel perfect reconstruction IIR filter banks consisted of allpass filters, with both linear phase and orthogonality, to image coding and show that the proposed IIR filter bank with 3 zeros at z=1 for the analysis lowpass filter, has less computational complexity and produces better results in terms of PSNR than the FIR filter bank, namely the two-channel linear phase biorthogonal (9,7)-taps. Consequently both linear phase and orthogonality are essential to improve coding performance.