Iraqis hoard trillions of dinars, weakening banks

Shafaq News – Baghdad

Nearly 90 trillion dinars ($69 billion) – 92% of Iraq’s 98 trillion-dinar money supply – remain outside the banking system, former Central Bank of Iraq (CBI) official Mahmoud Dagher revealed on Sunday.

Dagher told Shafaq News that individuals, traders, and contractors prefer cash over deposits due to distrust in banks and slow adoption of electronic payments, worsened by repeated banking crises.

Hoarding cash, he warned, drains liquidity and undermines the Central Bank’s ability to curb inflation or steer lending. “When most money is outside the system, monetary policy loses impact."

CBI data confirms that 53% of Iraq’s money supply is now in circulation, up from 49% a year ago. Only 19% of adults hold bank accounts, and 10% use digital payments. The government is expanding salary transfers, deposit insurance, and e-payment systems to draw idle cash into banks.