The Governor of the Central Bank of Iraq, Dr Ali al-Alaq, confirmed that about 80% of Iraqi currency stays outside the banking system. This large share of cash remains mainly in private homes. He stressed that this situation stems from limited public trust in banks.
He explained that the new Banking Reform Document aims to change this reality. The plan focuses on building trust, modernising operations, and aligning Iraqi banks with global standards. Moreover, the reform will encourage cooperation between Iraqi financial institutions and leading international banks.
Al-Alaq pointed out that this reform marks a crucial step for the financial sector. By improving transparency, security, and services, the Central Bank hopes to encourage citizens to deposit money in banks instead of keeping it at home. Additionally, he stressed that attracting public confidence remains the key to success.
He also shared that only 10% of banks expressed concerns about the new measures. Meanwhile, ten banks are in the process of liquidation because they failed to return customer deposits. These cases, he said, highlight the urgent need for reforms.
Furthermore, Al-Alaq emphasised that the reform program is not just about technology upgrades. It will also focus on stricter monitoring, better customer service, and training programs for bank employees. These changes aim to provide faster and safer financial transactions for all customers.
The Governor said the Central Bank plans to work closely with local and global partners. Such cooperation will open new opportunities for investments and financial growth. He noted that improving trust in banks is the most important part of the plan. This effort will help move the 80% of Iraqi currency outside banks into the formal financial system.
He concluded that the future of Iraq’s economy depends on the stability of its banking sector. With the new reforms, he expects gradual change that will strengthen both banks and the wider economy. The Central Bank hopes that through this strategy, the amount of cash outside banks will decrease steadily over the coming years.