🇮🇶💰 97 TRILLION IQD OUTSIDE IRAQ’S BANKING SYSTEM — A MAJOR REFORM CHALLENGE
📰 THE NEWS: A new report from Shafaq News highlights the enormous amount of Iraqi currency circulating outside the banking system.
💵 According to financial expert Mahmoud Dagher, around 105 trillion IQD has been issued, with approximately 8 trillion IQD inside banks and roughly 97 trillion IQD outside the banking system.
⚠️ But there is an important distinction: 97 trillion IQD does NOT mean 97 trillion is sitting in people's homes.
Dagher estimates that around two-thirds of the cash outside banks is actively used for transactions such as merchant payments, real-estate purchases and salaries, while roughly one-quarter may represent actual hoarding.
🏦 WHY IS THIS IMPORTANT?
Prime Minister's financial advisor Mazhar Muhammad Saleh says cash remaining outside banks limits the banking sector's ability to:
💰 Attract savings
🏦 Provide credit
📈 Finance businesses and investments
💼 Create productive economic activity
🔎 Improve financial transparency
The problem, therefore, isn't simply the existence of cash. The bigger issue is when cash becomes the preferred method for storing wealth and conducting transactions, keeping money outside the formal financial system.
💳 IRAQ IS TRYING TO CHANGE THIS
The Central Bank is promoting:
📱 Electronic payments
💳 Payment cards
📲 Digital wallets
🏪 Points of sale
🏦 Financial inclusion
🔐 Greater confidence and protection for depositors
Iraq reportedly has 72 operating banks, including 7 government banks and 65 private banks. Yet having more banks doesn't automatically mean people will use them for savings, payments and financing.
🔥 MY TAKE:
This is another important piece of Iraq's broader financial transformation.
If Iraq wants to modernize its economy and eventually make major changes to its monetary system, it needs to know where its currency is, how it moves, and how much is actually circulating versus being held as cash.
👀 And this is where the Delete the Zeros discussion becomes particularly interesting.
A currency redenomination would involve replacing large denominations and could potentially create an opportunity to bring more physical currency into the formal banking system—but this article does NOT say that a Delete the Zeros project is being implemented.
🇮🇶 The bigger picture is clear:
💵 Cash economy → 🏦 Bank deposits → 💳 Digital payments → 💰 Credit → 📈 Investment → 🏭 Production & jobs
That is the transition Iraqi policymakers appear to be trying to encourage.
⚠️ IMPORTANT: The 97 trillion IQD figure should not be interpreted as 97 trillion hoarded dinars. The article specifically explains that much of this cash is actively circulating through the economy.
🔥 BOTTOM LINE: Iraq's challenge isn't simply getting cash into banks. It's building enough trust and modern financial infrastructure to make banks the preferred place to save, transact, invest and finance the economy.
🇮🇶💱 And if Iraq eventually pursues major monetary reform, having greater visibility and control over the currency circulating outside the banking system could become extremely important.
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