The Ministry of Finance is facing a serious liquidity crisis, and this has started to delay salary payments. What’s surprising is that there is plenty of cash in Iraq — but most of it is sitting inside people’s homes instead of inside banks. Many citizens simply don’t trust the banking system, so their money never enters the financial cycle.
Financial experts say the only way to revive the economy is to rebuild trust between people and the banks. They stress that Iraq needs stronger laws and stricter oversight to protect depositors and force banks to operate responsibly. Right now, they say, the weak banking system is stopping financial institutions from doing their basic job.
Specialists are also calling on the Central Bank to take tougher action against banks that break the rules or refuse to release customer deposits. They say the bank must create real incentives that encourage people to deposit their money and help support economic development.
Economic expert Basil al-Ubaidi suggested creating a special banking company that guarantees people’s deposits and allows them to withdraw at any time. He believes the lack of guarantees is one of the main reasons behind the current liquidity problem.
Al-Ubaidi told dinaropinions.com, “If people deposit their money and banks use it for development projects, everyone benefits — the citizen, the bank, and the state. But this will only happen if there are clear guarantees that withdrawals won’t be restricted.” He added that the proposed company should be financially strong and ideally set up as a partnership between the government and the private sector.
Financial expert Mohsen Abdul Jalil said the “backwardness of the Iraqi banking system” is a major reason many foreign companies refuse to invest in Iraq. He explained that upgrading the country’s banking infrastructure to global standards has become essential for attracting investors. He also emphasized that promoting a culture of depositing and investing money inside the financial system will help support long-term economic growth.
Experts agree on one thing: the solution must start with concrete decisions from the Central Bank. They believe restoring trust in Iraqi banks is the key to bringing liquidity back into the system and restarting the country’s economic activity.
