Iraq’s 100 Trillion IQD Problem: “Hoarded” Notes Need to be in Banking System: Awake-In-3D


Iraq’s 100 Trillion IQD Problem: “Hoarded” Notes Need to be in Banking System

On November 3, 2023 By Awake-In-3D


I found this article interesting. I do not know the position of the author, but it appeared in the Arabic-language news website Al-Sabah. What made it noteworthy for me was that it’s the first time I have seen a statement quantifying Iraq’s 100 Trillion IQD outside of Iraqi banks.

This means there is A LOT of IQD notes stuffed away, or “hoarded”, in Mr. Al-Mutwalli’s own words.

I have got to believe that many within Iraq’s economic and political echelons are fully aware that we all hold substantial amounts of IQD.

Or, do they actually believe that most of Iraq’s 100 Trillion IQD is under the mattresses of everyday Iraqi citizens?

Anyway, I seriously doubt that any of our notes will not end up in Iraqi banks until they revalue their currency. Food for thought.

“Official estimates indicate that 85% of the issued cash mass, which amounts to more than 100 trillion dinars, is outside the banking system…”

Yasser Al-Mutawalli

Now onto the article…

The article discusses the issue of hoarded money, which is cash that is kept outside the banking system in Iraq.

This large amount of money is not being used for development because people do not trust the banks.

The central bank is trying to encourage people to deposit their money in banks by offering incentives. However, the lack of trust in banks is a major challenge. To restore trust, the article suggests the need for a deposit insurance company to guarantee deposits and provide clear and transparent information about its activities.

The fluctuation of the exchange rate also affects trust. Overall, the article highlights the importance of restoring trust in banks to encourage people to deposit their money and stimulate economic development.

Here is the original article…

Hoarded Money and Depositor Incentives

by Yasser Al-Mutawalli

November 1st, 2023

[Translated from original Arabic]

Official estimates indicate that 85% of the issued cash mass, which amounts to more than 100 trillion dinars, is outside the banking system, referred to as hoarded money outside banks. This means that this enormous amount of cash is disabled from performing its role in development. Since banks, through their credit policies, are the driving force behind economic development, their inability to perform this role is hindering our economy from progressing due to the decline in the performance of development banks.

Meanwhile, monetary policy is heading towards stimulating depositors to engage with banks. The recent circular from the central bank urged banks to facilitate procedures and create incentivizing interest rates to attract depositors.

What challenge does this approach face?

The trust factor is the most difficult and fundamental indicator for the success of attracting and mobilizing hoarded funds from the public to deposit them in banks.

Banks worldwide, in all advanced countries, are the primary engine of the economy through their lending policies that contribute to generating benefits for depositors and bank owners by investing funds and achieving profits. They also contribute to implementing projects, thus facilitating the circulation of funds.

However, the Iraqi banks have, honestly and transparently, lost the trust of the public. This is a deep-rooted problem inherited from the actions of some banks due to weak management and the alienation of depositors.

How can we restore trust in light of the new approach?

The public seeks guarantees (insurance policy) to be encouraged to deposit their savings, which requires facilitating deposit and withdrawal operations in an uncomplicated manner. However, the weak banking behavior of some employees and the complexity of instructions in a bureaucratic manner contribute to the public’s reluctance.

The term “insurance policy” refers to the officially designated entity responsible for deposit insurance in the event of the collapse of a specific bank. This is where the role of the deposit insurance company, recently established for this purpose, comes into play.

Here, I have a critical evaluation of the deposit insurance company, with transparency and clarity, stating that its performance is weak, sluggish, and poorly known. It requires the establishment of a regular and influential media unit to continuously market its activities. The company should provide guarantees to depositors by guaranteeing their funds with an official, signed document distributed among all depositors in any bank, holding legal responsibility for deposit insurance. Otherwise, why was it established?

Thus, it can provide partial security that encourages the public to deposit in banks and gradually restore trust.

We cannot ignore the impact of the fluctuation of the exchange rate of the dollar in creating chaos and undermining trust.

However, we are talking about the national currency, which is still strong and there is no problem in depositing and withdrawing it, with the guarantee of the company.


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