CASH HOARDED IN HOME SAFES AND LOST TRUST IN BANK VAULTS
At the heart of the banking confidence crisis that is hindering the spread of electronic payments in Iraq, the majority of economic transactions are still conducted in cash, while savings remain completely outside the formal banking system.
However, the average Iraqi citizen manages his daily life entirely by relying on paper money, as he withdraws his salaries in cash, pays for his purchases in cash, and keeps his savings at home away from banks.
Meanwhile, electronic payment cards have become a routine part of daily life in neighboring countries, revealing that Iraq is about twenty years behind in adopting the simplest modern financing tools.
This delay reflects “weak confidence in banks,” as observers describe it, since the huge amount of cash is hoarded inside homes and exceeds 90 trillion dinars, or about 90 percent of the total cash in circulation, according to the latest data from the Central Bank.
In addition, statistics indicate that less than 20 percent of the population has bank accounts, compared to more than 50 percent in Saudi Arabia and the UAE, where digital payments have been commonplace for years.
A Baghdad resident said via Facebook, “I prefer to keep my money at home for fear of any potential banking crisis, as past experiences do not encourage trust.” A local economic activist stated, “The sector needs radical reforms to build trust, especially with the push to end cash payments in government institutions by July 2026.” A banking source noted that “electronic transactions grew by 17.7 percent in the first quarter of 2025, but reliance on cash still prevails despite the launch of platforms such as ePassole in the Kurdistan Region.”
Despite these government efforts, the biggest challenge remains convincing citizens of the security of the digital system amid fears of losing or freezing deposits.
