Iraq’s economy continues to struggle under the weight of a powerful cash culture. Despite various reform attempts, the nation remains heavily dependent on physical currency. Currently, about 92 percent of the country’s money circulates outside its banking system. This trend makes Iraq one of the most cash-reliant countries in the world.
Many experts believe that the strong cash culture limits the growth of Iraq’s financial system. It discourages investment and weakens trust in the banking sector. Instead of depositing their savings, citizens often prefer to store cash at home or use it for everyday transactions.
The Iraqi government has introduced several initiatives to improve the banking sector. These efforts include promoting digital payments, encouraging bank usage, and launching public awareness campaigns. However, progress remains slow. The population’s deep-rooted mistrust in financial institutions continues to block reform.
Furthermore, Iraq’s informal economy thrives under the current system. Small businesses, especially in rural areas, often avoid banks. They prefer cash because it feels safer and requires no documentation. This practice, however, hinders tax collection and keeps economic activity hidden from the state.
In urban areas, people still rely on cash to pay for services, rent, and even salaries. This habit slows the development of electronic payment systems. Banks often face technical issues and limited outreach, which adds to public frustration.
Another major problem is limited access to banking infrastructure. Many regions in Iraq lack enough bank branches and ATMs. This shortage keeps people dependent on cash and makes digital financial services difficult to access. The cash culture remains a barrier to financial growth.
Some officials have suggested reforms, including offering incentives for using digital platforms. Others support policies to require certain payments through banks. Yet, these proposals often face resistance from both the public and small businesses. Changing habits will take time and trust-building.
For now, Iraq’s economic future depends on breaking free from this cash-first mindset. By building a stronger financial system, Iraq can unlock greater economic potential. Until then, the cash culture remains a barrier to progress.