Winds of Change in Iraq's Economy: The Role of Electronic Payment Systems in 2024
The winds of economic change are indeed blowing in Iraq, and electronic payment systems are at the forefront of this transformation. The adoption of digital payment methods is seen as a catalyst for modernizing the country's financial system and stimulating economic growth [1].
The Digital Leap: A Shift from Cash to Cards
Iraq has witnessed a significant leap in promoting the use of electronic payment cards, moving away from a cash-based economy [2]. This shift is attributed to official projects and digital policies that aim to protect public funds from corruption and enhance payment system efficiency by transitioning to digital payments [2]. The government's efforts to promote e-payments and point-of-sale (POS) systems are part of a broader strategy to limit cash transactions and improve financial transparency [3].
IMF's Perspective on Iraq's Economic Recovery
The International Monetary Fund (IMF) noted Iraq's strong economic rebound and declining inflation, which resulted from improved domestic conditions and the implementation of the first-ever three-year budget [1]. However, the IMF also highlighted the risks associated with Iraq's large fiscal expansion and its vulnerability to oil price fluctuations [1].
The Rise of Digital Banking
The Central Bank of Iraq (CBI) Governor, Ali Al-Allaq, predicted a rise in the number of digital banks in the country, forecasting Iraq to become a leader in digital banking compared to its neighbors [2]. This prediction underscores the potential for electronic payment systems to drive economic diversification and foster a private sector-led growth [1].
Legal Framework for Electronic Payments
Iraq has taken legal steps to regulate electronic payment services, mandating that entities offering such services must be licensed by the Central Bank and comply with its standards [3]. This regulatory update, published in April 2024, aims to enhance the efficiency, security, and transparency of the financial sector [3].
UNDP's Role in Electronic Payments
The United Nations Development Program (UNDP) approved the electronic payment services system in Iraq, marking a pivotal step in the country's financial sector and digital transformation [6].
Conclusion
Iraq's adoption of electronic payment systems is a pivotal development in its quest for economic modernization and stability. The country's digital leap, endorsed by international organizations and supported by legal and regulatory frameworks, sets the stage for a more diversified and resilient economy.
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