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100 TRILLION DINARS HELD IN HOMES: WITHDRAWAL RESTRICTIONS FUEL A “CASH ECONOMY,” BUT THE CENTRAL BANK OFFERS REASSURANCE

 100 TRILLION DINARS HELD IN HOMES: WITHDRAWAL RESTRICTIONS FUEL A “CASH ECONOMY,” BUT THE CENTRAL BANK OFFERS REASSURANCE

Confidence in the Iraqi banking sector is facing a critical test. While an economist warns that restricting withdrawals is fueling a “cash economy” and hoarding 100 trillion dinars in homes, the Central Bank rushed in an extraordinary session to reassure the markets, stressing the strength of the financial system and its ability to manage liquidity, in an attempt to bridge the gap between precautionary policies and depositors’ fears.

Loss of confidence in banks

Economic expert Haider Abdullah Asfour told Al-Alam Al-Jadeed on Tuesday (March 10, 2026) that “the inability of citizens to withdraw their money in full from banks causes significant damage to the banking sector and the economy in general,” explaining that “this is mainly due to the weakness of those in charge of this sector, their lack of experience, and the confusion in dealing with crises, which greatly affects the work of banks.”

Local news sites reported on Monday that Rafidain and Rasheed banks are suffering from a severe liquidity crisis and a shortage of cash, with a clear decline in the funds available within them. Branches of the two banks have begun asking customers to wait or return later to receive their money in full, 

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while some branches are providing part of the required amount and postponing the delivery of the rest.

Asfour explains that “one of the most prominent of these damages is the loss of confidence in the banking sector, as when a citizen cannot freely withdraw his money, he loses confidence in banks, which leads citizens to refrain from depositing their money in banks and prefer to keep cash at home instead of in banks.”

It is believed that “weak confidence also leads to a decline in bank deposits, as citizens begin to gradually withdraw their money from banks, which leads to a decrease in the volume of deposits and weakens the banks’ ability to lend and invest.”

Cash economy

He points out that “this also contributes to increasing the cash economy, as citizens keeping their money outside banks leads to an increase in cash circulation outside the banking system, which reduces the state’s ability to monitor financial and tax activity and the movement of funds that may be directed towards terrorism, support for extremist and terrorist groups, or corruption.”

He adds, “Among the repercussions is also the weakening of investment and development, as banks rely on deposits to finance projects, and when deposits decline, loans granted to small and medium enterprises decrease and economic growth slows down.”

Investors’ reluctance

He continues, “Restricting withdrawals also leads to damage to the reputation of the banking system locally and internationally, as it harms the reputation of banks and leads to the reluctance of foreign investors and the difficulty for banks to enter into international partnerships.”

100 trillion dinars

Expert Asfour points to the existence of a large cash mass outside the banking system, saying: “The cash mass in Iraq amounts to about 100 trillion Iraqi dinars, which is equivalent to 75 to 76 billion dollars according to data from the Central Bank of Iraq at the beginning of 2026,” indicating that “about 70 to 90 percent of this cash is outside the banking system and in homes, which leads to a weakening of the credit role of banks.”

Asfour calls on decision-makers and those in charge of this “sector to reconsider the policies followed in a way that serves the Iraqi economy and the national interest and does not harm the interests of citizens and their confidence in the banking system.”

Iraqi market

The economist points out that “regional conditions, including the war between the United States and Israel on one side and Iran on the other, and what is related to the Strait of Hormuz and the halt in oil production, as well as the banks depositing about 117 trillion dinars with the Central Bank, in addition to the banks’ fears of the rise in the price of the dollar against the dinar, are all factors that have confused the Iraqi market.”

It also points to “practical problems faced by those dealing with banks, such as contractors who have payment vouchers issued by certain ministries and deposited with banks, but they face difficulty in receiving their money due to the lack of liquidity, which casts doubt on the banks’ ability and weakens confidence in them.”

Central Bank reassures

The Central Bank of Iraq confirmed on Monday that it continues to perform its constitutional and legal responsibilities in protecting monetary and financial stability and maintaining the strength and integrity of the banking system in Iraq.

The bank stated in a statement received by “Al-Alam Al-Jadeed” that the Central Bank’s Board of Directors held an extraordinary session to follow up on current economic and financial developments, review the most prominent macroeconomic indicators, and assess future expectations in light of local and international developments and the challenges or opportunities they may present to the national economy.

The statement added that during the meeting, the council conducted a comprehensive assessment of the monetary and financial market conditions, including an analysis of liquidity levels in the banking system and developments in the money supply, as well as a review of the levels of foreign reserves at the central bank.

The Council also reviewed financial stability indicators and the performance of the banking sector, in addition to monitoring foreign trade and payment flows, while assessing potential risks associated with regional and international economic variables and their potential repercussions on the Iraqi economy.

The council discussed a number of possible economic and financial scenarios for the next phase, focusing on how to enhance the flexibility of monetary policy and the sustainability of financial stability, and ensure the banking system’s ability to respond efficiently to the demands of economic activity.

Temporary shocks

Asfour affirms that “building a successful banking system requires an integrated and modern system that serves all parties,” stressing “the need to adopt economic policies that enhance confidence among investors and depositors instead of weakening it.”

He warns that “banks may be able to withstand temporary shocks, but they are required to look at the long term, enhance confidence, attract funds and investments, and encourage the localization of funds within banks through appropriate incentives and benefits, which will contribute to bringing the large monetary mass into the banking system and supporting financial stability in the country.”

Media sources revealed earlier (February 15, 2026) that the government was forced to withdraw about 20 trillion dinars from Al-Rafidain Bank, in addition to between 7 and 8 trillion dinars from Al-Rasheed Bank, as well as withdrawing about 7 billion dollars from another bank, along with sums of money from industrial and agricultural banks, in order to cover salaries during the past months.

MNT GOAT: Political Delays, Iraq Elections & the Long Road to Currency Reinstatement

 The long-anticipated Iraqi dinar revaluation (RV) continues to be one of the most discussed topics among global currency watchers. However, recent updates indicate that the process may still face delays as Iraq navigates political uncertainty and regional tensions.

At the center of the discussion is the pending official nomination of Prime Minister Mohammed Shia Al-Sudani, along with ongoing political maneuvering within Iraq’s leadership structure.

While many investors hoped for faster progress, current developments suggest that patience will remain essential as Iraq continues its complex transition.

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Iraq Waiting for Official Prime Minister Nomination

One of the most important steps toward political stability in Iraq is the formal announcement of the prime minister nominee.

Although strong indications suggest support for Sudani, the official confirmation has not yet been made.

Why the delay?

Several factors appear to be contributing to the pause:

• Parliament has indicated that sessions may be limited during the ongoing regional tensions with Iran
•

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Political groups are negotiating leadership roles behind the scenes
• Kurdish leadership has not yet finalized its presidential candidate announcement

Until these political pieces fall into place, major economic reforms—including currency adjustments—may remain on hold.

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Kurdish Leadership Also Holding Back Presidential Announcement

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Another important development involves the Kurdish region of Iraq.

Kurdistan is reportedly ready to announce its candidate for the Iraqi presidency, but the leadership has also chosen to wait.

Possible reasons for the delay

• Coordination with Baghdad political negotiations
• Security concerns linked to regional conflict
• Strategic timing within Iraq’s broader government formation process

Political negotiations in Iraq often move slowly, and this process could take weeks or potentially longer.

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Understanding the Long Delay in Iraqi Dinar Reinstatement

One of the biggest questions among dinar observers is simple:

If Iraq was close to reinstating the dinar in 2012–2013, why has it taken more than a decade to complete the process?

This question leads to deeper discussions about the political and economic challenges Iraq has faced over the past two decades.

Key issues that slowed monetary reform

• Political instability after the 2003 Iraq war
• Security threats including ISIS expansion
• Corruption within political institutions
• Foreign influence affecting economic decisions

These factors created obstacles that repeatedly slowed the progress of Iraq’s monetary reform plans.

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The Role of Iraq’s Election Cycles

Another important factor in the RV timeline is Iraq’s political cycle.

Each election period brings changes in leadership, alliances, and policy priorities.

Because currency reform is tied closely to economic policy, banking modernization, and international financial agreements, major reforms are often postponed during uncertain political periods.

This is why many analysts closely monitor government formation and leadership stability before expecting major monetary changes.

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Political Power Struggles in Iraq

Some analysts also point to ongoing political power struggles involving major factions within Iraq.

One of the most debated issues is whether former political figures might attempt to regain influence in Iraq’s government.

Why political influence matters

Currency reform requires strong coordination between:

• The Iraqi government
• The Central Bank of Iraq
• International financial institutions
• Regional political actors

When political factions compete for power, economic reforms can slow dramatically.

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Regional Tensions Continue to Affect Iraq

Another factor impacting Iraq’s political timeline is the broader Middle East security situation.

Tensions involving Iran and regional actors have increased uncertainty in the region.

Why regional conflict affects monetary reform

Security instability can lead to:

• Disruptions in oil production and exports
• Reduced foreign investment
• Pressure on government resources
• Delays in economic reform initiatives

Because Iraq’s economy relies heavily on oil revenues, any disruption in energy markets can influence financial planning.

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Why Patience Is Still Important for Dinar Watchers

Although many investors hoped the Iraqi dinar would already be reinstated, the reality is that major national financial reforms take time, especially in countries recovering from decades of conflict and political restructuring.

Several important conditions still need to align:

1. Stable Iraqi government leadership

2. Continued economic reforms

3. Regional security stabilization

4. Banking system modernization

5. International financial cooperation

When these elements begin to align, momentum toward currency reform may accelerate.

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Featured Snippet: Why Has the Iraqi Dinar RV Taken So Long?

The Iraqi dinar revaluation has taken many years due to political instability, corruption, regional conflicts, security challenges, and delays in forming stable governments capable of implementing major economic reforms.

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Q&A: Iraqi Dinar Revaluation and Iraq Politics

Q: Why hasn’t the Iraqi dinar been reinstated yet?

A: Political instability, economic reforms, security challenges, and government formation delays have slowed the process.

Q: Why is the prime minister nomination important?

A: The prime minister leads economic and financial policy decisions necessary for implementing currency reforms.

Q: Could regional conflict delay reforms?

A: Yes. Security concerns and geopolitical tensions often force governments to focus on stability before economic restructuring.

Q: Is the RV still possible in the future?

A: Many analysts believe currency reform remains part of Iraq’s long-term economic strategy, though the timeline remains uncertain.

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Final Thoughts

The journey toward Iraqi dinar reinstatement has proven far longer and more complex than many expected.

Political negotiations, leadership transitions, and regional instability continue to influence Iraq’s financial decisions.

While there may not be dramatic updates every day, the underlying developments in Iraq’s political and economic system remain important signals for the future.

For those following the dinar closely, the key remains staying informed and watching the larger political picture unfold.

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